PARLIAMENT DEVALUATION OF THE POUND: MR NASH REVIEWS POSITION

Greymouth Evening Star, 21 September 1949, Page 8

PARLIAMENT DEVALUATION OF THE POUND: MR NASH REVIEWS POSITION

. WELLINGTON, Sept. 20 (PiA.).— New Zealand’s standard of living should not be directly affected'by de-, valuation, said the Minister of Finance (Mr Nash) in the House of. Representatives today. About 12. per cent.of New Zealand’s imports were drawn' from dollar, .sources,''.but-they were largely capital goods not obtainable elsewhere. There might ultimately be some chaise in the price of sterling area goods that included raw materials of dollar origin, but it was too early yet to assess those effects accurately. “The overall effect on our economy may not be as heavy as has been calculated, but that is'not .to say that a steep rise in the price of sorpe goods from the dollar area may not cause concern,” Mr Nash said.. Licences had already been issued this year to the value of £19,000,000 for imports from the United. States and Canada and about £18,000,000 was expected to come to',charge. Included in that figure was £8,000,000 worth of capital good’s not obtainable from Britain and the sterling area.' Consumer Goods The remainder of the licences, to the value of £11,400,000, were for consumer goods obtainable only from the dollar area. It included such items as newsprint (£2,000,000), oil (£1,750,000), tobacco and timber, and other goods to the value of just over £4,500,000. Mr Nash said it was thought that £11,000,000 had been remitted during 1949 before devaluation occurred, including probably £2,000,000 on account of 1949 imports (and possibly including some payments against 1950 licences) that had been remitted in time to benefit by forward payment. Mr Nash said New Zealand’s total dollar payments a year, including imports, dividends, and services were about 75,000,000 dollars. This would, now cost about £26,750,000 of about j £8,000,000 more than previously, if no allowance were made for other j factors which might entei' into the, picture. New Zealand’s total dollar , earnings were about 30,000,000 dol- I lars a year. Devaluation would'lessen the dollar value of New Zealand ex- , ports, but should stimulate purchases by the dollar area. ’There should also, be a reduction in black-market dol- | lar transactions in New Zealand goods but it was impossible to say yet what, the overall effect on New Zealand’s, dollar income wduld be. I Black-Market Operations | Mr Nash said that during the first : six months of 1949 skins to the value 1 of 391,000 dollars, all of New Zealand , origin but none, he thought, exported , directly from New Zealand, were im- j ported into America. This was the result of the operations of black-mar-keteers, who, buying sterling at a cheap rate of say 260 cents instead I of- 403 cents, had bought New Zealand skins and sold them to the dollar area) probably at an initial loss, but re- I couped themselves by buying dollar goods which were resold for a final profit in the sterling area. J The Minister of Industries and Commerce (Mr A. H. Nordmeyer): The skin game. Mr Nash said the skin game ought to end now. Many dollars had been lost to the sterling area in this way, but in future it should be difficult to obtain sterling at any substantial discount, and the result should be to return millions more dollars to sterling and eliminate operations in cheap sterling. “No-one Out Of The Wood”

Had this decisive action not been taken things would have gone from bad to worse, said Mi* Nash, involving the United Kingdom in deflation and all its consequences.

An Opposition voice: They are not out of the wood yet. Mr Nash: No one is out of the wood yet.. But our prosperity is linked with that of the United Kingdom and the Government proposes to help . the United Kingdom to the limit in her present difficulties. Mr Nash said the decisions of the Washington conference gave great cause for hope. It might have been feared by some that'the United States in the face of sterling devaluation, would retaliate against sterling goods with higher tariffs or by prohibiting

j imports of British goods, but there were pledges against high United . States tariffs and ppw.er to reduce ex-, isfing ones. Britain had been freed from the non-discriminatory' clauses of the barlier loan agreement and in other ways was being assisted 'to -strengthen her position.* I Discussing. other Washington deI cisions'. and their likely effects, Mr ' Nash said there would still be a need for some restriction on the use oi petrol. / Not Yet Known “This decision, announced yesterday, was the most profound in the history of exchange,” said the Minister. It looked as if many other countries were following suit, but there would be one or two exceptions apd the full position would not be known for a little whije. Mr Nasji. predicted'that devaluation with other hteps that had been taken, should go' far to restore a proper balance of trade between the dollar and sterling areas. The Hduse agreed that Mr Nash s statement, together with his broadcast statement yesterday and that, of Sir Stafford Cripps, which preceded it, as well as a summary of the decisions of the Washington conference on dollars should be printed together for the information of members.