COMMODITY MARKETS AND PRICES.

Manawatu Standard, Volume LX, Issue 216, 10 August 1940, Page 4

COMMODITY MARKETS AND PRICES.

OVERSEAS TRADE. (By “Penloo.”) The production year in New Zealand ended on Juno 20, though of course there would bo some late shipments of produce to go forward, blit, these would be negligible. The trade figures for the year ended June 30, 1940, were recently released by the Customs Department, and this enables us to make comparisons with the previous years. But it must lie kept in mind that this is war time with overseas trade very much disturbed, largely owing to shipping dislocation. However, in the table a|>riendcd the exports and imports for each of five years are given;—

The exports for the year just ended show an increase of just about £8,000,000, as compared with 1930, while the imports show a decline of nearly £10,500,000. There of course reasons for both movements. The large increase of £8,000,000 in exports is no doubt due to the British Government commandeering our main primary products at very satisfactory prices and paying for the produce at rcguiar_ intervals. It is a question whether the higher monetary return is duo to increased production. This will not be known until the details are published in the Monthly Abstract. It is very probable, however, that the higher realisation is due to higher prices. Some few lines of produce do show some increase on output, but the price factor has been the main cause. The exports for the past year at £65,859,000 aro a record, and one that is likely to hold for some time. The best previous record was for the year ended June 30, 1937, when the amount was £64,621,000. As a matter of fact, during each of the past five years our export income has been large, and broadly speaking we should be enjoying extreme prosperity. It is the exports that govern our economics, for when the export income is . big the spending power of the people is largo. In a depression year the exports were valued at £34,668.003, and this helps to emphasise the effect of exports on our economic life. Exports represent our excess production —that is. the surplus above local requirements. Our spending power on foreign merchandise cannot exceed the amount of our exports; indeed wo cannot spend up to tho full amount for out of the export income we must pay tho interest on our public debt, and the amount required for this purpose runs to over £10,000,000. Some readers may not understand why tho interest on tho public debt should come out of the export income. The matter is cosily explained. Tho interest has to he paid in sterling. The produce we ship to. Britain is sold for sterling, and the money is paid mainly into our trading banlcs. It is easier for tho Government to use the sterling credits than lo pay in gold ns it would have to do. 'l’ho hanks accept New Zealand currency for sterling. The same thing happens when a morchant imports from Britain. He pays tho hank here for tho sterling he wants in London. The basic fact is that goods pay for goods, _ and money or bank credit is .lust a convenience for facilitating the exchange. Wo must export moro and still more if we desire to maintain our economies m a healthy position. Our export income is affoeled bv Ibe state of .tile terminal markets. If there is a relatively small supply of any particular product prices ascend, and fall when the supply increases. Thus our oxpoit income varies from vear to year, depending upon the volume ’of production and the prices realised. Those who have concerned themselves with Britain’s foreign trade will know that the United Kingdom is making strenuous efforts to maintain and if possible expand the export trade. And ibis is being done oven at (he expense of throwing some workers out of employment, that is "workers engaged in production for home consumption. Britain is so heavily importing war materials and munitions that slidmust export to find at least some of the money to pay for these goods.

THE IMPORTS. The value of the imports in New Zealand currency at £46,070,000 was about £10,500.000 less than in the previous, year, and yet cur exports for the period were a record. The movement is due to a variety of circumstances. 'The main reason has been the control of exchange and (he restriction of imports. But the total might have been larger but for the war. When hostilities began British lactones were promptly turned over to the production ot munitions and foreign trade was ietc to look after itself. Importers could not got their orders in Britain executed.. Moreover, tho world shipping services were dis.oeatod, tho movements of ships were orratio with the result that the receipt of iorcign merchandise has been haphazard Because iff this difficulty with imports Loudon sterling funds have been increasing rapidly. The excess of exports over imports at the end of June last was £19,788.000, while for the vear ended June 30, 1939, the excess was "onlv £1,391.000. Imports should fluctuate with tho fluctuation ot the exports, -mrl the excess of exports over imports should he at least about £10.000.000. But a good tourist .season would affect the position. In 1937 and 1938 tho demand for imported goods was so strong .that it won running ahead of the export: income, an a check had to ho applied and so we hat import restrictions.. The restriction by the Government was tho first ease of its kind m tho history of the Dominion, and few people liavo diagnosed tho cause. Until December, 1938. when restrictions became operative, tho imports were regulated h> the normal economic laws, and that enm pulsorv restriction was necessary shows Ilia there must have been a drastic disturbance at some point. And so there was. Ihe raising of wages and the shorteningof the hours of work had a double effect. Spending power was increased while pioduction tended to decrease. I bus / ' spending power was m excess of H <_ lion, and if there had been no check the. whole of the export income would have gone in the purchase .of foreign manufactures and in foreign investments. In 1936 the excess of exports oxer imports amountdrotmeu to C 8.600.000. in 1938 to £4,3(7.UUU. and in 1939 to £1.391.000. How the position will stand when the war ends it • difficult t.o suv. Heavy taxation. and hi„b prices must check demand, which means that the standard of living will be louc. There is of cour=e. no change in the wage scale or the working hours; on tho contrary I boro is a demand for higher w-ages, an; if -granted that would aggravate the position.

Year endedExports Imports June 30 £ £ 1936 .... .. 53,660,000 39,460,000 1937 .... .. 64,621,000 56,076,000 1938 .... .. 61,920,000 57,342,000 1939 .... .. 57,891,000 56,500,000 1940 .... .. 65,859,000 46,070,003