The Franklin Times PUBLISHED EVERY MONDAY, WEDNESDAY AND FRIDAY AFTERNOON. WEDNESDAY, MARCH 22, 1939. ELUSIVE LONDON FUNDS

Franklin Times, Volume XXVIII, Issue 32, 22 March 1939, Page 4

The Franklin Times PUBLISHED EVERY MONDAY, WEDNESDAY AND FRIDAY AFTERNOON.

WEDNESDAY, MARCH 22, 1939. ELUSIVE LONDON FUNDS

Office and Works.: ROULSTON '■ STREET, PUKEKOHE. ’Phone No. 2. P.O. Box 14. “We nothing extenuate nor aught set down in malice.”

THREE months have passed since trade and finance were cast into the Governmental strait-jacket and New Zealand is still searching for a sign that the elusive London sterling exchange is responding to the drastic protective treatment. Actually after the first quarter under the new conditions the London funds of the Reserve Bank have increased by only £505,040 and this in spite of a period regarded as the flush of New Zealand’s exporting season. While this disappointing result can he attributed to the lower value and volume of exports compare ! with last year (there was a decline of £1,282,000 in January), it is evident that imports are not responding as quickly to the restrictions as the Government expected. In January, 1938, imports were £5,584,000; this year they were £4,723,000, and it is obvious from the present state of London funds that there has been no marked change in the proportion of exports and imports during February. When Mr Nash met importers in January he estimated that a drop in export income of £3,000,000 or £4,000,000 during the current year would have to be provided for. But in the very first month of 'lie year the decline was £1,282,000 and climatic conditions during February in- , dicated that in dairying, at least, production had been severely curtailed. ;

These i'actors demonstrate the difficulty faring the Government m repairing the cracks in the financ' d edifice that became so dangerous towards the end of last year. On Mr Nash’s own admission the margin between exports and imports for 1938 was approx.mately £8,000,000 short of what was normally required to meet debt 'virvices and other invisible items. And during the present financial year £17,173,191 of the public debt wiii mature in London.

The difficulty of meeting, in some way or another, this financial liability does not end this financial year. For some years successive Governments will have to deal with the frequently awkward task of meeting calls from London for huge sums. ' The following table shows the dates and amounts of the major items of indebtedness maturing during the next 10 years: Year Amount ' £ 1939-40 , 17,173,191 1939-43 - 13,678,215 1942-46 9,211,470 1945-46 22,543,590 1947-48 11,221,609 With the exception of the 1939-43 and 1942-46 amounts the above totals all fall due for maturity in London. If Labour adheres to its oft-repeated policy of not borrowing in London it is evident that overseas funds will have to be built up substantially and quickly. Otherwise to save default the expedient of overseas borrowing will have to be resorted to, and that Labour regards as anathema —as subservience to overseas money-lenders. Yet the reshlts of the first three months of trade and finance control confirm the view that the stable door has been banged after the horse has lied and that the expedient of exchange control is still largely ineffective. Although the import restrictions will be felt more severely in the months to come exports also will decline rapidly. Consistently during 1936, 1937 and 1938 the trade balance reached its worst point during August and September, months when exports tail off «o heavily. And it will be during this same period this year that the effectiveness of the Government’s policy will be most severely tested, as then it will be too early for the industrialisation plans to be bearing the necessary fruit.