The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” GISBORNE, SATURDAY, OCT. 21, 1939. IMPORT RESTRICTIONS

Gisborne Herald, Volume LXVI, Issue 20074, 21 October 1939, Page 4

The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” GISBORNE, SATURDAY, OCT. 21, 1939. IMPORT RESTRICTIONS

When the import control regulations were first introduced the hope was expressed by the Minister that it would be possible to relax them after the present year. Since nothing had been done to remove the causes which made control necessary, the business | community had not dared to share the Minister's hopes but it did have reason to expect that after nearly twelve months’ experience there would be some improvement in the administration of this cumbersome and costly method of interfering with the trade of the country. Now, however, it is found that confusion has become worse confounded and that control, like the habit of drug-taking instead of being a remedy becomes increasingly pernicious. The procedure under which import licenses are to be granted for the third six-monthly period has now been announced. Mr. Nash certainly endeavours to make the best of a bad job, but the one thing that emerges from his mass of verbiage is that there is to be a further enforced curtailment of imports —of things which the public needs to maintain its much-vaunted standard of living. Despite the further restrictions, Mr. Nash also made it clear, in a somewhat round-about way, that even if licenses arc granted there will again be no assurance that the Reserve Bank will make available the funds required to pay for imports. Such is the plight to which the Dominion has been reduced after a period of record prosperity.

By inference at least, the Minister endeavours to convey the impression that the war has something to do with the present position, but this is not the case. It is difficult, of course, to accurately assess the effect of the war, but it is a reasonable assumption that in the normal course of events there would be an increase in the value of exports and an automatic contraction of imports, due both to the difficulty of securing supplies and to the diversion of expenditure to defence needs. In these circumstances, London funds would have been built up automatically. In addition, the drain on them would have been reduced through the export'credits amounting to £9,000,000 which were granted by the British Government. Despite these credits, however, London funds have continued to decline and it has been found necessary to further curtail imports. More than that, it is common knowledge that a substantial proportion of the imports in recent months have been obtained on the deferred payment system, so that, in addition to further depleting the already small London balances, the Dominion has been piling up more overseas debts which must be met at some future date. In overseas trade, as in other directions, New Zealand is living beyond its means and unless a halt is called the end is inevitable. The present crisis is due to two major causes. The first is the lack of confidence which became so apparent last year and resulted in an export of capital,j and the second is the fact that the inflationary policy which has been pursued for some years has led to a demand for imports for which the country cannot afford to pay. There has thus been a drain on overseas funds from two directions. The orthodox methods for countering such a trend were ignored and an attempt was made to rectify the position through the import control system under which the Government attempted to dictate what classes of imported goods the people were entitled to purchase. This procedure has clearly failed, for in each of three successive licensing periods imports have been further restricted but there has been no appreciable or permanent increase in London funds. In the meantime nothing has been done to restore the confidence that is so vitally necessary and instead of the consumer demand being checked it is being accelerated by a further expansion of internal credit, At the same time, production generally is declining and the net result is that while the people have unlimited supplies of paper money there are insufficient goods to be purchased with it and New Zealand currency, of course, will not pay for imported goods. While these fundamental causes of the evil remain there can be no improvement and import control must be accepted as a necessity. This stifling of trade, however, will inevitably lead to a further contraction of production, and unless the present policy is reversed New Zealand will have to face a position in which it

will be unable to meet its overseas I commitments without inflicting dire j hardship on the people. Returns issued this week show that in two im- j portant secondary industries, woollen I mills and footwear factories, for the ! year ended March 31 last there were : more than 400 fewer hands employed j than in 1930-37 and that the value of j their products declined by about 20 per cent. This experience is more or

less general and goes to show that the

expansion of credit and the creation of purchasing power has not made more goods available to the people but has found an outlet mainly on non-productive expenditure. Necessary expenditure on defence will accelebrate this trend and there is very real danger under the present policy of the people having plenty of paper money and a much more serious shortage of goods on which to spend it. The time has long since past when steps should be taken to place New Zealand’s economy on a more stable basis. Unless this is done point will be given to the Berlin radio’s recent reference to New Zealand as “two bankrupt little islands in the South Pacific,” and the Dominion will again have to submit to the ignominy of hearing the 8.8. C. broadcasting to the world that New Zealand has imposed further restrictions on imports.