The Evening Star SATURDAY, JULY 22, 1939. TEMPORARY RELIEF.

Evening Star, Issue 23325, 22 July 1939, Page 14

The Evening Star SATURDAY, JULY 22, 1939. TEMPORARY RELIEF.

When Mr Nash went to England on his first mission he was full of confidence in the soundness of his Government’s financial and industrial policy. It is true that he achieved little in his efforts to foster trade relationships, but he came back with the tide at the flood in this Dominion and so escaped much adverse comment. On this occasion a different position arose. A state of acute financial stress developed, which had been indicated by the imposition of the drastic import restrictions, and the Minister had to rush off to London, cap in hand, and appeal to the British Government for help. It was humiliating to the people of this Dominion, who for so many years had prided themselves on their prosperity and ability to meet their financial obligations. The present New Zealand Government on taking office found itself in possession of a rich inheritance. In three and a-half years of extravagant administration, in an effort to spend its way to prosperity, the reserves have been dissipated, the Government’s resources exhausted, and the goodwill of the Motherland had to be sought in a state of emergency. This was made additionally embarrassing by the fact that by its policy of expanding secondary industries, which is linked up with the import restrictions, British manufacturers have suffered severe losses of trade with this country. Two predictions were made when Mr Nash left these shores. One was that in his capacity as Minister of Finance he would not receive an enthusiastic reception in London and his requests for financial accommodation would not be conceded without concessions on his part. The other was that Britain would act with her traditional generosity to New Zealand in the matter. Both these predictions have come true. Mr Nash left this country on the first day in May. The negotiations with British Ministers have' been protracted, and it is only now that concrete results have been announced. Financial relief to the extent of £9,000,000 has been promised, but certain stipulations which cut into the secondary industry policy of our Ministers have been imposed. Mr Savage explains that £5,000,000 will be made available on' “ approved conditions ” for purchases by the New Zealand Government, and £4,000,000 governed in the same way, is to pro-' vide money for the needs of private traders. Under the arrangements announced our Ministers can say goodbye to the policy of trade expansion outside the United Kingdom, a desire that was expressed by them on many occasions, for the funds made available are to be used for purchases in Great Britain only. The position will not be palatable to, say, France, among others, which is a heavy purchaser of our wool and has already expressed resentment over the import restrictions. New Zealand is receiving help through the British Exports Guarantee Department, which is empowered, with the consent of the Treasury and an advisory committee of business men, to give guarantees in respect of exports involving more risk than the ordinary trader was prepared to take.

In other words, the function of this department is to help needy countries. At the moment New Zealand is a country in need brought about by reckless State expenditure. The undertakings given by Mr Nash include the assurance that it is his Government’s intention to administer its import restriction policy as favourably as possible in relation to United Kingdom

interests; that his Government would relax the restrictions as far as possible to ensure a maximum expansion' of trade between Britain and New Zealand; and that United Kingdom goods would be given full opportunity for reasonable competition with New Zealand industries. One promise made that will be welcomed in this country was Mr Nash’s assurance that the policy of licensing imports would not be used to .foster uneconomic industries. Looking at the position all round it cannot be said that the position gives much ground for satisfaction. At the most it can only be claimed that the worst has been avoided. An indication of the plight into which the Government had plunged itself can be gathered from the report of the Reserve Bank, which gives pointed advice to avoid further recourse to that institution for accommodation. . It looks as if New. Zealand’s Government, under the spur of financial embarrassment, will have substantially to amend its policy in many directions. One thing is made clear, and that is that there has been an awakening from the dream of this country spending- its way to prosperity.