Manawatu Evening Standard. TUESDAY, OCTOBER 6, 1936. NEW ZEALAND'S RECOVERY

Manawatu Standard, Volume LVI, Issue 264, 6 October 1936, Page 6

Manawatu Evening Standard. TUESDAY, OCTOBER 6, 1936. NEW ZEALAND'S RECOVERY

The British Trade Commissioner in New Zealand, Mr R. Boulter, in his report to the British Board of Trade, rightly asserts that New Zealand squared up to the depression by a policy of economy and self-sacrifice. We presume the report covers the year to tlie end ol March last. ft is quite true that the country made sacrifices as proved by the sales tax, the wages tax and the unemployment levy. Furthermore the high exchange was in the nature of a further tax. There is no doubt, however, that our principal help towards economic recovery came from without. The improvement in Britain's conditions was speedily reflected in the Dominion in higher prices for our products. Dairy produce, wool, and meat yielded us larger incomes iu 1935, and' are continuing to improve. So far this has been our salvation, but when we endeavour to penetrate the veil that hangs over the immediate future we confess that we are greatly puzzled to know whether our progress to economic recovery will continue, or whether it will become sporadic. A good many things have happened since the Trade Commissioner sent Home his report, and it is to estimate the possible reaction and repercussions of these happenings that constitute a difficult problem. To aid the Dominion in its recovery the people submitted to the taxes named above and the high exchange which still remain, and furthermore there has been additional taxation imposed through the increase in the income tax and the reimposition of the land tax. Thus, while it is claimed that New Zealand has made progress iu economic recovery—and that is indisputable—this improvement occurs just when the taxes are increased, or in other words, we are to assume that the sacrifices the people have already made have been insufficient and so more taxes have been found necessary. Another matter that makes forecast impossible, is the fact that costs of production are exceptionally high, and there is every probability that New Zealand’s price level will be above world price level, which must make for increased imports. But we are to continue on the prosperity’- road by heavy borrowing,! mainly from the Reserve Bank, and this is equivalent to mortgaging the future.

But we cannot consider our economics apart from world economics. The monetary pact signed by England, Fiance and the United States must necessarily have far-reaching and favourable effects, if the nations play up to the policy envisaged in the agreement. That policy is to set free international trade, and it can-

not be carried out unless the nations make an immediate start to lower exchange controls — Australia and New Zealand are both involved in this. Both countries must reduce the exchange on London, the effect of which will he more severe on Australia than ourselves. Australian industries have enjoyed the benefits of the high exchange much longer than the industries in New Zealand. So far as we are concerned there are two economic waves to be faced—one generated locally through higher costs, higher taxation, and greater public spending, and the other arising out of the monetary pact. What will be the repercussions on New Zealand ‘i