‘WHAT OF FUTURE?’

Nelson Evening Mail, Volume 79, 27 May 1944, Page 4

‘WHAT OF FUTURE?’

IF ECONOMIC STORM COMES COUNTRY MI NT SHORTEN SAIL VIEW OI MR L. LEFEALX Wellington, May 26. 11 anything approach.ng il»e economic storm* of ihe idle 20 s and early 30 ’s Should be encountered in the future it would be neces.aiy, as in the pa.-:, Co snoitca tail, lor to attempt to run cn under full sail would be inviting trouble, said Mr L. Leieaux. former governor ol the Reserve Bank of New Zealand, in an address to the Optimists’ Club. Wellington, yesterday. No amount of monetary manipulation could ensure prosperity in such conditions; the utmost that could be done by that means would be to spread the burden differently. Mr Lefeaux, the title of whose talk was “What of the future?” said that many important factors at present unknown might bear on the future of the Dominion after the war, but. whatever the answers, consideration of the past and present might help in reaching a proper attitude and estin.ate of the future. In 100 years human elements added to natural advantages had caused remarkable progress in New Zealand, and o healthy body had been build up. Another factor which had* been of great benefit to the Dominion had been the capital provided from overseas. "In a young country ability to attract outside capital in case of need is a valuable a#*ei, find I sincerely trust nothing will be done here to undermine the confidence on .which it depends, said Mr Lefeaux. “Such capital naturally looks for three main things: a reasonable annual yeturn stability of exchange values, and above all freedom of movement. If those requirements are denied, a country is thrown back on its own resources and must save to provide all ita capital needs.

Without wishing to disparage past achievements, said Mr Lefeaux, it wik impossible to escape the conclusion that New Zealand had been decidedly fortunate in many respects, because of a combination of favourable circumstances. Not only had successive war* failed to lead .to the violation of its shores, but ihey had actually produced periods of abnormal prosperity. Much as it was with armament firms, war produced abnormal demands for primary produce, and thanks to the Royal Navy and now to its American allies. New Zealand's principal customer had been able to continue to acquire the bulk of its produce, for which more than average peacetime prices had been obtained. That favourable position had actually been accentuated by the misfortunes of some of the Dominions principal competitors. BRITAIN’S MISFORTUNES In contrast, material damage in Britain amounted to well over £10.000,000.000 and its export trade had been cut to ribbons. New Zealand’s assets overseas had actually increased by £30,000.000 after making some debt repayments. while Britain had spent £1,500.000,000, practically the whole of her overseas assets, in the common cause. Then there was the bslance of about £24,000.000 owing by New Zealand to Britain in respect of the last war, on which instalments of principal and interest had been suspended for many years : nd might possibly never be resumed. Again, there were the enormous imports under lease-lend and similar arrangements which were now being received without payment, at least for the time being, raising the total of imports for one year to tht stupendous figure of £95.750,000, easy record for all times. “Exactly whflt is the full significance of these iMfe mentioned figures we are not fold,” salf Mr Lefeaux, “but someone somewherf has to save and pay for what is provide ed without charge to this country.” He said he did not wish to make in» vidious comparisons or belittle New Zealand’s war effort, but to help discover the extent to which the country's achievements and position could serve as a reliable guide for others the extent to which they could be relied on as a guide for her own future. If New Zealand had not borne, in peace as in war, her proportionate share of the cost of Empire defence and other similar costs of a completely sovereign State, it certainly had a bearing on the question of whether other countries, more self-supporting, could hope to afford such lavish monetary benefits as had been provided by the State in ttwo Dominion. . Jr Till development reached a far moro advanced stage the Dominion’s prosperity must depend in the main on the amount received for exports. So long as overseas customers had freedom of choice as to what they would buy and what they would give in exchange, their decisions must have an important effect on the prosperity of any country living largely by its exports. He did not believe that the leanness of the depression years and the prosperity of the perior just before and during the war were due to the respective Governments which load happened to be in power at those times.

DOMESTIC POLICY

"When this country was hard pressed others were more so.’ said Mr Lefeaux. “Borrowing or obtaining goods on credit would be well nigh impossible in such circumstances. Failing any auch external assistance the only alternative was to go on short commons during, or immediately following, the lean export years. I include the year following because the natural tendency is to spend in one year the proceeds of the previous season’s exports. This necessity could only be obviated by underspending during relatively good export years and building up a reserve fund overseas to augment the amount available lor importing when export re turns are small. i “Any suggestion that the hard (-•arse I have indicated could he avoided if similar lean expert years are to he experienced in the future is, in my opinion, not only misleading but highly dangerous, and I M ould counsel \ou not to he tempted to believe that any form of domestic administration could make the path smooth and easy in such circumstances.” Denying all political motive in saying this, he said that, for ill he knew the administration might have been very bad in New Zealand during the lean years, and it might have been possibl*? to mitigate lhe severity of the blow for those least able to stand up against :t. but it was usually easier to look bark when calm seas had been reached and say what should have been done to weather the storm better. A prosperous nation provided the be 4 , hope of a good standard of living for all As people, for such prosperity tended in time to spread over the whole, but that prosperity had first 'to be won. Difficulties could not be overcome by attempting to lend oneself money, and international conferences could not. of themselves, ensure prosperity. It remained with those ac’uallv engaged in production and industry, "whether as employers or employees, to achieve success by their skill and efforts. Work should not be looked on as a necessary evil but useful tasks delighted in. and the warning of Winston Churchill to beware of a society in which enterprise gained no reward and thrift no privileges. should be heeded.