THE TRADE BALANCE

Hawke's Bay Tribune, Volume XIX, Issue 31, 23 January 1929, Page 6

THE TRADE BALANCE

JT is very gratifying indeed to learn almost at the one time that our banks have succeeded in rectifying the relation between their deposits and their advances and that our last year's oversea trading shows a very substantial excess of exports over imports. It would be still more satisfactory were we afforded some assurance that these conditions would be maintained. As has been more than once pointed out here, we should not have to regard the position into which the banks have worked themselves as being some thing exceptional. It should, in fact, be the normal position, though, without trespassing against sound principles, the present excess of deposits over advances might perhaps be appreciably reduced at this season of the year. As to the excess of exports over imports, this, too. should be a result to be steadily aimed at. Unfortunately we can not control the prices at which our exportable produce can be realised, but we can do something, -indeed a great deal yet, to increase their volume. More certainly still does it lie with our selves to restrict our imports with in reasonable limits. Last year’s oversea trading gives a balance in our favour of over eleven million n vling, far and away ‘•e best ' ”t»-

this does not mean that we have that amount to play with as we like. In the first place, it has to bo »emembered that out of it we have to pay some six or seven million of interest upon that part of our National Debt owing abroad. This says nothing either of the interest on outside public body borrowings. Nor does it take into account shipping and other services payment for which goes out of the country. Thus, when outgoings and incomings are set one against the other, the margin is nothing so very great even in a good year such as the last. Then, when we come to lock back, it will be found that only in one of the seven immediately preceding years was the surplus of exports sufficient to meet even the interest on the National Debt, while in one of them the balance was badly on the other side, and in the others tho deficiency was very substantial. It will thus be seen that, on this rough and ready reckoning, we have, in respect of the period mentioned, a very weighty “dead horse” lying upon us that it will take a good many years like the last to work off. For some years it may be said that, as a community, we have practically been paying our outside creditors theii interest largely opt of the further moneys we have been periodically borrowing from them. This is a process that cannot go on in definitely without creating a cumulative burden under which we must inevitably break down. It behoves us therefore to watch most jealously any tendency towards a resumption of excessive importa tion such as has almost invariably followed upon a good export year. It was only the other day that Sir Joseph Ward seemed to welcome as a good portent the announcement of a big importing merchant, one of his own supporters presumably, that he had “doubled his orders.” If there are many more doing the same in contemplation of the lush times Sir Joseph promises us, then there will not be much of a favourable trade balance at the end of the current year. There is plenty of good work at home awaiting any surplus income we may be able to gather in without scattering it abroad on extravagant imports.