DRAPERS’ VERDICT

Nelson Evening Mail, Volume LXXII, 22 December 1938, Page 8

DRAPERS’ VERDICT

ON YEAR NOW ENDING SATISFACTORY ON THE WHOLE COMMENT ON GOVERNMENT POLICY “The year now dying has been a very satisfactory one on the whole, though not without its times of worry and anxiety,” states the “New Zealand Draper” editorially. “Trade has not been quite so good as in the previous two, but remembering far worse ones we have every cause to be thankful and prospects for the coming year may be regarded as very hopeful. There are a few clouds about which we trust will disperse without developing anything stormy, and it is hoped the season of peace and goodwill will foster that much-needed spirit in industrial, national and international affairs. MOBILISING RESOURCES “On re-election after three years in office it is gratifying to note that our Labour Government is awakening to a realisation that if its commendable ideas of bettering conditions all round, raising the workers’ standards of living, and increasing the spending power of the people, are to become based on sound economic production, there must be an increased output of wealth, created by our own energy and enterprise, and facilities for the economic distribution of that wealth must be encouraged and fostered

“We have constantly pointed out that higher wages and shorter hours can be sustained only by higher production and more rapid consumption of the goods produced; and that if costs soar to cancel out the benefits created by higher standards of living no one is really any better off. and we are then in a worse position to meet and resist any temporary setback which may occur.

“We are still in a large measure dependent on prices for our staple products overseas for our national wealth and general prosperity, and it is a welcome sign that opening sales of our wool indicate greater returns to our pastoralists for this substantial item in our national income. We trust this upward trend will be maintained, and that a similar increase will favour our dairy produce and meat exports, so that our primary producers with their heavy loading of additional costs will be able to enjoy the same benefits of higher incomes which have been extended to the town producers.

THE “NEW DEAL - “The Government now announces an economic survey of our productive efforts, and a drive to secure increased production in both primary products and manufactured goods. A welcome announcement is made that the cooperation of private enterprise is being sought as the principal means toward this end, rather than the extension of State activities and encroachments on the field of business affairs. We are again promised a revision of the methods of taxation so that trade and commerce will not be over-burdened with a burden of taxation which hampers the expansion and growth which the Government now so wisely seeks.

“During the past year some anxiety has arisen about the decrease in the sterling funds lying to our credit in London, and in some quarters there has been a tendency to blame importers entirely for this drain on our overseas credits. But comparisons of the total costs of imports this year with the previous ones do not support that contention entirely, and there is no doubt that even the increased imports are in a measure due to State activities in public works, State building operations, railway, post office, hydro-electric, dockyard, defence and other equipment for State services which have been paid for in London by drawing on reserves there, and it is wide of the mark to blame our retail traders for the position that has arisen. It would be a mistaken policy to interfere unduly with ordinary trading facilities with Britain on these false assumptions and idle talk with no foundation in fact.

REPATRIATED CAPITAL “When the rate of exchange was raised to 25 per cent, on London some years ago, there were firms shipping goods here who were satisfied for payment to be made in New Zealand, and the moneys to be invested here. That v/as all for the good of our country where additional capital is needed, especially when loan money was not available for overseas in London. With but little prospect of the exchange rate falling again, and some loose talk of it possibly advancing further, it is not surprising if those overseas firms which invested their funds here are now realising their securities, repatriating their funds, and so reducing our London credits. It is fantastic to describe that as “a flight of capital” in a domestic sense. It is merely the overseas owners of the funds realising what is theirs and using their unquestioned right to transfer them back to their more immediate control, and that is quite a different matter from local investors realising assets here to send them elsewhere for investment.

EXCHANGE OF GOODS “Our Government leaders have frequently pointed out that while we enjoy such an open and profitable market in Britain for the export commodities which make up such a substantial quota of our national income, it is all to our advantage to retain that only worthwhile market overseas by offering every facility for taking goods of British manufacture in return for our exports, and it would prejudice our external trade to interfere needlessly with the exchange, specially for goods which are not made here, or are needed for manufacturing and development here. “As a debtor country we have to export more than we get in return, so that we may meet our public and private commitments in London. But once thos° liabilities have been fully provided for, nothing is gained in piling up huge accumulations of sterling funds in London, at low rates of interest, when that capital could be put to better use in developing our resources and productive activities here.’ *

Such of the cable news in this Issue as is so headed has appeared in “The Times” and is sent to this paper by special permission. It should be understood that the opinions are not those of “The Times” unless expressly stated to be so.