King Country Chronicle. Monday, July 24, 1939. A RESPITE ONLY.

King Country Chronicle, Volume XXXIII, Issue 4814, 24 July 1939, Page 4

King Country Chronicle. Monday, July 24, 1939. A RESPITE ONLY.

The granting of the £9,000,000 credits to New Zealand, though it seems likely to ease the position in the Dominion temporarily, can only be a palliative. The real reason still remains, that New Zealand has by a policy of high wages and shorter hours inflated her internal currency without commensurately inflating, or increasing, the rate of exchange. Through this policy there has been released much buying power without any increase in production, and New Zealand has been living on her overseas funds. These stood at the end of May at £7,400,000 as against £28,100,000 a year earlier, and the question must arise whether the same conditions that caused such a rapid depletion remain with us. In other words, will we deplete the repayable sterling credits in exactly the same manner, and for exactly the same reasons, as the credits built up in the depression were depleted? As far as can be seen at present, only the import restrictions seem to operate as a factor to prevent this, and it is evident from the tone of the White Paper announcing the granting of the credits that these restrictions have met with little favour in England. Mr. Nash is reported to have undertaken, as circumstances permit, by a relaxation of restrictions, to ensure the maximum expansion of the United Kingdom-New Zealand trade, consistent with the maintenance of sound economic conditions in the Dominion and with the Governments’ obligations to existing industry. It will be noted that it,is to be by relaxation of restrictions that this is to be brought about. This seems to indicate more than a granting to the United Kingdom of better terms than other countries on lines that are restricted. In order to be in a position to repay the credits, New Zealand will have to curtail expenditure overseas, but it is clear that, as a long-term policy at any rate, import control will not be favoured in England. In view of this it appears not unlikely that Mr. Nash/s acceptance of the terms premises the intention of New Zealand to cut her coat according to her cloth. This was actually partially indicated before Mr. Nash left for England by his appeals for a halt in the Onward and Upward movement. We have also his reported statement to English manufacturers to consider: “As soon as we are in a position to do so—the present restrictions operate until the end of 1939 imports will be resumed to the full extent of our ability. We have no wish to pursue a policy of isolation or self-sufficiency.” However, a statement made on Saturday by Mr. Savage that so far as he could see there would not be any alteration in the existing position does not seem wholly in accord with Mr. Nash’s statements, so that the future is not at all clear.