BANKER’S WARNING

Nelson Evening Mail, Volume LXXII, 26 November 1938, Page 13

BANKER’S WARNING

, NEW ZEALAND'S POSITION j lack of far sightedness in j POLICY ! i ! The prices received for New Zealand's ' i export produce have shown a gradual 1 but almost uninterrupted decline since November, 1937. In general du'Fihg the I past year conditions overseas both political and economic have deteriorated. At the annual gehfefai meeting of the Bank of New South Walefc, the president. Mr Robert \V. Gillepsife, expressed doubts whether, in the light of these unfavourable trends, the policy being j pursued in New Zealand tb’iiid be rc- ! garded as sufficiently far-sighted. \ There were how in existence. Mr Gillespie admitted, important factors which should tend to revive world demand ' and raise prices generally. Neverthe- j less, the unrest abroad h&d made for a ; feeling of insecurity which was bound | to have devastating effects oh | Ct’RftfcNCY RETURNS MUCH SMALLER While conditions abroad were disturb- J ed and doubtful. New Zealand’s international currency reserve*; \Vbre now j much smaller than they were a lew j years ago. Already, during the year I ended June. 1938. there was a small dc- j dine in commodity fekportS. This, coup- i led with transfers of capital out of 1 ' country and a substantial rise in im • : j ports, reduced the net oversea assets | ' left all banks to £N.Z.20.6 million at the j end of August. This figurd edmpared i | with £N.Z.32.5 million a year ago. and [iN.Z.42.5 million ih August. 1985. EXPENDITURE ON PUBLIC WORKS CRITICISED i Mr Gillespie criticised tilfe prbsent I scale of public works expenditure. He ■ allowed the utility ot such expenditure [ as a measure to offset the efffects on internal activity of a decline in export in- • come, but thought that the present level t was excessive for a time wlifen export income was still comparatively well maintained. If oversea prices should fall seriously it would be dohbtfu! 1 whether it would be possible to finance ( additional public works to take iip the : slack in employment and spending power due to falling export income ’ without imposing dringdrous Strains oh the economy of the eountry: SOCIAL SECURITY t Referring to the Social Security Act. s Mr Gillespie did not question the j e humanitarian principles underlying the I - benefits foreshadowed in the Act but ; s he pointed out that increasing revenue j c would be needed each year to finance j , the scheme Already the general ten ! . dency in the public finah’cbs for expen- j c cliture to be increased when revenue j q. was no longer expanding was cause for some misgivings. Mr Gillespie thought a less ambitious scheme would have greater chante of success, and in addi ; jtion. vVtitild have the meHt of enabling expansion to trike pHlte th the light of experience.