CONTROL OF IMPORTS

Nelson Evening Mail, Volume LXXII, 25 January 1939, Page 8

CONTROL OF IMPORTS

BIG MEETING AT WELLINGTON ADDRESS BY THE HON. W. NASH GOVERNMENTS POLICY EXPLAINED (By Telegraph—Press Association) WELLINGTON. This Day. The origin of the Government’s exchange control policy and factors influencing its decision to bring it into operation were set out by the Hon. Walter Nash, Minister of Finance, when addressing the importers' conference in the Wellington Town Hall this morning. The president of the Associated Chambers of Commerce, Mr M. S. Myers, of Dunedin, presided over an attendance of about 1150, fully representative of the business interests of the Dominion. . Mr Nash emphasised that since the introduction of exchange control and from the study he had given to the question previously, he was satisfied it was a commonsense, rational and reasonable procedure to follow, even with all the difficulties it would bring into being.

Mr Nasn said ne regaiueu n. « ■ privilege to allow the importers to know exactly what was in the Government’s mind regarding the regulations. For seven months, from 30th April to 30th November of last year there was a decline in the Dominion’s sterling funds in London of slightly more than £20,000,000 and the Government had to find out the reason for such a marked decline in such a short period. A procedure had to be found to augument the sterling funds and prevent their complete disappearance. Past Governments had usually borrowed to supplement the funds, and during 1923 to 1932 the national debt overseas increas- | ed by nearly £66,000,000. Since then | the Dominion had not borrowed any l new money overseas. The previous; Government had started to try to work out a way of preventing a continual i increase in the national debt, and dur-, ing 1933 and 1938 the debt was reduced by £14.000,000, including local body; debt. That automatically had some ef-j feet on sterling funds. In 1935-6 the ( funds were £46,000,000. The decline to the present level of £7,000,000 was not entirely due to over importation. Large sums had been taken out of New Zealand that had been left here in anticipation of the exchange going down. Another reason was that persons who had made money in New Zealand had sent large sums overseas with the object of getting higher interest rates. That was probably the major influence on the funds. EXPORTS EXCEED IMPORTS During the last twelve months exports exceeded imports by roughly £3,800,000 when at least £12,000,000 excess of exports over imports was required for normal working. The procedure before the Reserve Bank came into being was that when trading banks found their London funds were tending to decline they automatically started reducing overdrafts and increasing interest rates on overdrafts. Then their clients -were advised to curtail expenditure, automatically brought unemployment, reduced wages and spending power bringing about a decline in imports and so balancing the exports and imports. CURRENT COMMITMENTS The Labour Government decided not to adopt that method. Taking into account the' type of country New Zealand was it decided not to reduce the living standards or borrow in London to meet current commitments. It could have adopted several other courses than that adopted, namely increased tariffs or let the exchange find its normal level; but it decided it did not want that to happen. Had either of those two courses been followed there would still have been restriction of imports. There was no way he could see in which the necessary funds in London could be built up to the desired point except by restriction of imports. NOTHING NEW

imports and still enjoy the present j standard of living: obviously it must make arrangements to manufacture j in the Dominion and produce more j than in the past both of primary j and secondary for the purpose of building up the funds. New Zealand should be able out of its amazing resources to produce all the commodities necessary overseas and build up export funds to a greater extent than in the past. In addition, ways : and means must be found of making j more goods in New Zealand. The j manufacturers had a case in that there , were men, women and youth not fully employed. Manufacturers would have the maximum facilities provided for the imoprt of commodities necessary for the production of goods. First of all the selection would apply to facilities for primary production and then capital equipment and raw materials for manufacturing goods to replace imports. There would be curtailment of less essential and non-essential imports. In his opinion the United Kingdom had done more for the dominions than they could reasonably expect any country normally to do. (Applause). It had given special preferences re-, garding marketing facilities and made major contributions to the dominions’l defence, and New Zealand was willing i to do its part in making the impact I of the new procedure the least harm-1 ful against the United Kingdom Gov-; ernment, and would do all possible to I i reduce the difficulties to United King- ( dom manufacturers and others arising) from control. PREFERENCE TO UNITED j KINGDOM Maximum preference would be given to the United Kingdom, but there were other countries with which in recent years New Zealand had made agreements ar.d which he thought possibly would take more from New Zealand than previously. CREDIT AND CURRENCY Since the introduction of control, the Government was beginning to see for the first time what happened to the proceeds of the sale of exports, which had not been fully known in the past. Only during the past month or six weeks had j the Government begun to see the ramifications of credit and currency and the! effect on sterling funds. j He asked the conference to accept the fact that the Government had been elected to take charge of the country, and the new procedure was part of its policy. . He would do everything humanly possible to remove any hardship, or injustice, or anomalies that might arise. NO DISCRIMINATION As regards the procedure, Mr Nash said he had given instructions to all Collectors of Customs to act exactly the same at every port. There was to be no discrimination. He took particular pride in the staff of the Customs Department. And he had profound faith in their integrity. BASIS OF ALLOCATION The basis of allocation for the first six months of the present year was the

The present procedure was nothing new so far as the world generally was concerned. Thirty of forty countries had adopted exchange control. During the present year local body loans maturing in the United Kingdom were £849,000, and on Ist January next £17,172,000 was due by the Dominion in London. That implied that New Zealand had to find something more than £21,000,000 in New Zealand currency in London by the eijd of the present year. That could be done in three ways: New Zealand could induce some of the people to whom the money was due to renew their loans; more money could be found to meet the charges if New Zealand was to get fairly reasonable terms for renewal and repayment purposes; and some steps had to be taken to conserve the funds built up from the sale of exports. The decline in export value last year was £7,500,000, but the decline in import values was slightly less than £2,000,000. If New Zealand had only enough last year and was £5,500,000 worse off again this year obviously some curtailment was necessary. INTEREST ON DEBTS Mr Nash said that during the year New Zealand had to find interest on debts amounting to £8,600,000, and everybody would agree that it had to be paid first to maintain the country's integrity. Another prior charge of about £1,000.000 was on private investments held by people domiciled overseas. Then there was about another £1,000,000 required for salaries and commissions, insurance payments, and so on overseas. Another special circumstance was the present world situation, and New Zealand had to play its part in the Empire Commonwealth defence. The present Government had been spending at an accelerated rate on defence during the past few years out of sheer necessity, and he believed that the expenditure would have to be still further accelerated during the present year, for defence would have to come in before other imports. All those factors meant a fairly drastic cut in imports. It was commonsense to select the imports it was desirable to bring in, so that the new procedure would have the least harmful impact. It was impossible in New Zealand or elsewhere to have a standard of living other than that based on commodities and service produced. MORE PRODUCTION NECESSARY If New Zealand was to reduce

1 quantity imported in the first six months of 1938. That occasioned treI mendous difficulties. He knew there ! were anomalies and to overcome some | of them, although he did not want to. ; issue licenses for the second period just yet, instructions went out a fortnight ago to Collectors that where special circumstances existed a license could be issued for half of the total imports during the year. Provision had also been made for new lines and new imports. Hundreds I of appeals had been answered, and an j effort made to work out the general ! principles on special points. Cases of ; particular hardship would be dealt with* | immediately. As the gathering was breaking up a ! member of the audience rose to proj pose a vote of thanks to Mr Nash, but already many of those present had left j their seats and no formal motion was ; put. ; PROPOSED IMPORT RESTRICTIONS ON MEAT j rU.P.A.—By Electric Telegraph-Copyright! I (Received 25th January, 1 p.m.) LONDON, 24th January, j The Empire Meat Council has receiv- ! ed communications from New Zealand 1 and Australia which are considered to I warrant a meeting on 31st January to I reconsider the position regarding rej striction on imports of mutton and lamb. Official circles refuse to discuss J the Dominions’ opposition to the imj position of restrictions but it is believed that the meeting on 31st January I will enable the council to forward a of j scheme to the Board of Trade. The Government is anxious for a 1( l settlement before the assembly of Par- ! Lament. ys : , _