FUNDS FOR IMPORTS

Grey River Argus, 5 January 1940, Page 9

FUNDS FOR IMPORTS

Earlier Payments SPECIAL CASES MET RESERVE BANK ACTION. AUCKLAND, January 3. Because of a speedier improvement in sterling funds than was origin all) anticipated, through payments under the British bulk purchase scheme of Dominion produce, it is disclosed chat the Reserve Bank has arranged for earlier payments for some of the current second term licensed imports than were originally decided upon. This procedure has been followed where it has been ascertained that hardship or inconvenience has been caused by allocations up to June 30 for goods delivered in the Dominion or shipped this year. Arrangements for speeding up remittances in approved instances made through the trading banks. The readjustments of remittances on a basis that will permit transactions to be completed early in 1940 are believed to be very limited in number. Apparently the Reserve Bank intimated that it was not prepared to consider any requests for earlier remittances for second term goods alter this month and it insisted that its -eneral policy was unchanged. The limits it set on any relaxation to meet special circumstances were very precise, the funds set aside for the purpose being relatively small.

Exchange Control VITAL FACTS. Hon. Langstone in an article be has written specially for “The Stand ard,” pricks more political bubbles by giving vital facts concerning exchange control. .It is, he declares, the only practicable way of providing a true record of our overseas trading position, and it is impossible to have even the semblance of a planned economy in New Zealand without effective exchange control. There are three i methods which could have been adopted for conserving overseas funds: — 11) Allow the exchange to go free, which would of course mean that the bankers would determine the rate, and it would probably have gone so high as to have stopped imports altogether, or to have curtailed them very seriously. (2) A higher Customs tariff could have been imposed, which would also have restricted goods being imported. Either of these methods would have meant a big rise in internal price levels, with a consequent reduction in purchasing power. (3) Exchange control, which means regulating our imports to the amount of sterling credit available. In fact, it means paying our wav, or, in common parlance, living within our income. It also has other very vital advantages. In addition to ‘regulating our imports, it also classifies them, hence we can import those goods which we cannot make here, and give a clear local market for those goods which we can manufacture economically.

By this method we are able to develop our local industries in the best possible way and at the same time keep prices at a reasonable level. (4) By pursuing a policy of niggardly economy with a. general reduction of wages, salaries, pensions,, and other incomes, closing down of public works, reduction of social services, in foct, by re-introducing the policy pursued through the depression years. Surely the experiences from 1931 to 1935 are too recent to permit of such a calamitous policy. There is much said on the subject of "economic industries.” I make bold to say that unless Great Britain had been given most favourable Customs tariffs, below other countries, hei’ industries would not have been “economic" —in fact, speaking literally, we have taxed our people here very heavily indeed, to the tune of hundreds of millions of pounds, for the privilege of trading with Great Britain. I am not raising the slightest objection to this fact, but we must recognise how tariff concessions can put one country’s industries on a more economical footing than its competitors. Without exchange control and import licensing, it is impossible to get a true picture of our trade requirements, or to classify the kind of goods which should be imported. Prior to the licensing of imports there was no responsible authority to say what should not be imported.

Importers are not concerned with national economy—as a group they , wish to please themselves, and to place orders for the goods they require without any thought as to whether there are sterling funds available to pay for the goods on the due date. This, they 'say. is no concern of theirs, and they resent any alteration to this policy of . pleasing themselves. A responsible Government, worthy of its salt, particularly a debtor country, must take a very keen interest in such a matter, because in any circumstances it become a matter of Government concern and cannot be side-stepped. The action of past Governments in pursuing a. policy of borrowing to meet a given situation was walking along Easy Street; but the further we go along this street the more difficult things become. It is when the loans begin to fall due that difficulties arise. Often New Zealand Governments . ■ borrowed when prices for our primary produce were high. In the intervening years prices fell, and we had to send away-double the quantity of goods to meet our interest and sinking funds on loans maturing. Moreover, in many instances the "work done with this borrowed money no longer exists, and in such cases

we are left with a debt without any corresponding asset. Some loans have, of course, been raised at low rates' of interest, and . some at high rates. All these things have an irhportaht bearing oh our national economy, which the ordin - ary man in the street does not appreciate, but which a Government must face Every New Zealand Government accepts responsibility for the actions [ of its predecessors, and loans. which i were raised : when butter was bringI ing 2s per lb. and wool £25 per bale, have’ to be repaid when butter is under Is per lb. and wool £l2 per I bale. This creates a difficulty, and we are 'compelled to send , away double the amount of goods in order i to meet, our interest bill. r Importers are not concerned wui these issues; they imagine that because they require goods they should

be able to get them by some magical process.

The £17,000,000 London loan due early in 1940 has been arranged for. £10,000,000 is to be met in cash, and the balance is to be spread over five years, making an average annual payment in debt reduction of £3,200,000. The more of our London cash that is used to pay off loans, the less there is for imports; and New Zea-:, land cannot have,, it both ways. We cannot pay debts and have the money for imports. In addition to this there are London loans falling due—in 1944, £7,339,658 at 41 per cent.; in 1945, £7,780,408 at 41 per cent.; in 1946, £22,543,500 at 41 per cent, and 5 per cent., making a total for these three years of £37 663,564. Everyone will admit that this is a stiff proposition, and will take careful handling. The market may be favourable for converting at a lower rate when the due date arrives, but this is The best that can be hope 1 for. •

To be forewarned is to be forearmed, and it will take all the ingenuity a Minister of Finance possesses to make the best provision possible, assuming that we are able to pay off the £17,000,000 (31 per cent.) by 1945. This will mean a saving of £700,000 per annum of sterling funds. In addition to this overseas debt burden there are internal loans falling due totalling £31,119 - 321 between 1940 and 1946. This will give the reader some idea of the stupendous task which the Government must perform, and at the same time run the business of the country. THREE THINGS THAT CAN HELP. Having shown this phase of our problem, the next question is: What to do? There are three things which can materially help us to maintai i our standard of living and to continue to advance:— (1) If we can obtain a higher price in London for our exported goods. This is a matter which is beyond our control, but we anticipate that the prices fixed with the Imperial Government for our produce will yield £ more than was received in the season 1938-39.

(2) If we can increase our primary production of exportable goods. The greater volume of exports expressed in higher prices would further assist to build up overseas cash balances. It is imperative that the Unite.! Kingdom Government should agree to take all our production for a long period, so as to allow us, a debtor nation’, to meet our commitments There was a danger,' prior to the outbreak of war of a restriction of the quantity of lamb'and mutton admitted to Great Britain, and if this were extended to butter, cheese wool, etc., it would cause tremendous difficulty for New Zealand. I would like to see the “open door” policy operated until our London debts are liquidated, at least. (3) If we can increase the output of goods from our own factories. There should be no slackening of effort in this direction, and where local industrial production can be increased and expanded, it should be done. This applies mainly to commodities, for which we have,. ample supplies of raw materials; take woollen goods, for instance —all classes of woollens should be made in New Zealand. Our women, to be loyal to New Zealand, should use woollen materials wherever possible. “Keep down imports to sheer essentials” should be our slogan. Leather goods, boots, shoes, slippers, bags of every descrip ■ tion, coverings and upholstery, should all be made here. Leather and .wool can be put to many uses for which imported materials are used to-day. It must be recognised that any rise in prices of imported goods will cancel any advantage New Zealand may secure from increased products. . A well regulated and controlled increase in price levels favours the producer, because it makes it easier for him •to meet his financial com - mitments in respect of debts, i.e., bank loans and other financial accommodation.

Importers naturally prefer free and uncontrolled rises in prices, where they are the sellers. Any restriction or curtailment of this is anathema to them. During the last Great War owing to the rapid rise in prices in the time between a cargo leaving Great Britain and its arrival in New Zealand, importers were permitted to make tremendous profits; and they would like to have the same opportunity of making money this time. However, the Government has taken a strong stand against this form of extortion, and only the actual increases in buying prices are allowed to be passed on to the New Zealand customer.

There are some lines which we will not be able to get partly owing to war conditions and partly to the conserving of sterling funds; but if we are serious in this business —and we must be serious—we should not mind making a few sacrifices and putting up with some inconveniences in order to attain our goal. “Where there’s a will there’s a way,” and any sacrifice or inconvenience suffered here will be a mere bagatelle compared with the sacrifices that are necessarily made in European countries. And any New Zealander who grumbles because of a slight sacrifice does not deserve to enjoy the. privileges, freedom and high standard of living which this country affords. We are a very fortunate people, living in a veritable paradise.: There can be no shortage of the three ’ essentials to life, food, shelter, and clothing. The opportunity is ours: success or failure is in our hands: but it is only by hard work, coupled with intelligent understanding, that we shall be able to meet every emergency. Crying, self-pity and carping criticism will get us nowhere: we must be up and doing to win through. Our troubles and burdens are more psychological than physical.

SENSELESS RUMOURS ... “We would -say to members; ‘Forget these rumours,’ ” stated a staff notice issued by the firm of Smith and Brown, Ltd., Symonds Street,' Auckland, denying senseless rumours about businesses closing down. The staff notice, a copy, of which has been sent to Miss L. 1 Purcell,’ secretary of the Auckland Shop As-, sistants’ Union, by Mr R. J. Nicholl, the manager of the firm, reads as follows:— ' Members .may have heard, as your executives have all sorts of rumours as to what may or may not happen early in the New Year. Vague rumours at present are spreading that retail’ firms may close down for a period as a protest against re-

strictions and many others, concerning practically everything under the sun. “Individual members therefore can be pardoned for possible concern for his or her future, and it is for this, reason that ■ the executive desire to place"'before you the company’s attitude from ■ the outset, • “The company will not under any consideration become party to any move or scheme which may mean loss of employment for any member, irrespective of how short the per'otj. Further, the company will, as in the | past, follow, the laid down policy of : loyalty to the team even if it be ; necessary to isolate ourselves, to safeguard the members from any action taken by other retail' stores. “The"’company, with the co-opera-tion and loyalty of members with the executives, has been responsible for the building of a large and far-] reaching business and no outside pres- | sure from any .source will be allowed • to influence the company into letting down a loyal member, of the team. “We would say to members, ’Forget these rumours.’ Some twelve months ago when executives were and still are, optimistic for the future and amid all sorts of dismal' rumours, we predicted that the, store would still carry on ‘full bore.” Our past outlook on the future has proved correct and we see no future problem ' which cannot be successfully j countered by the happy combination which exists in this country.” The manager of the firm, in a letter to the secretary of the union, stated that' he wished it to be known that the company would not under any,', consideration become party to any move or scheme to close the store for the purpose of a general protest, or otherwise. “Following our usual practice,’ the letter adds, “we have taken an early opportunity of advising our staff bf. our .intentions per medium of the enclosed circular, thus safeguarding them from any concern on account of these rumours.”