THE TRADE POSITION.

New Zealand Herald, Volume LXVII, Issue 20563, 14 May 1930, Page 12

THE TRADE POSITION.

PRICES FOR PRODUCE.;

IMPROVEMENT PREDICTED.

CONDITIONS OVERSEAS.

An increase in overseas market prices for New. Zealand produce and a gradual improvement, in the trade position in the Dominion after a period of financial difficulty were prophesied by Professor If. Belshaw, professor of economics at the Auckland University College, speaking at tho luncheon of tho Karangahapo Koad Business Promotion Society yesterday. Professor Belshaw pointed out that, because of (he large export trado per capita, the fluctuations of external markets directly influenced tho prosperity of the country. Tho influence of market prices on tho "so-called balance of trado" was great, but it did not manifest itself immediately. The returns received by farmers were not immediately spent and even if merchants received orders within a short time, some months would elapse before tho goods reached New Zealand. That was why it so frequently happened that, largo imports came into the country in tho midst of unfavourable conditions. In the light of that explanation, tho fluctuations from very favourable balances to very unfavourable ones were explained. An unfavourable balanco of trado, by taxing tho resources of the banks, accentuated the trado depression. It had to bo remembered that a trado balance, to bo really favourable, should show a surplus of £3,000,000 or £4,000,000 in exports over imports, in order to pay the interest on loans already borrowed by the State.

In the year 1928-29, Professor Belshaw continued, tho general position was such that an increase in business activities might reasonably havo been expected. Tho extent to which it occurred was disappointing. Lack of confidence among investors, a high bank rate and tho employment of tho increased return in repaying debts to tho moro cautious investing public could be blamed for the failure to register a great improvement in trade.

"Nevertheless, I feel that the absence of a 'boom' in that year will make it much easier for New Zealand (o weather the present hard times," Professor Belshaw said- "Wo can expect difficult conditions for a while. At present, wool and dairy produce prices are, to say the least, unsatisfactory, and Australia's posi tion has reacted on us unfavourably in many ways. On tlio other hand, the lowering of tho English bank rate will very probably mean a transformation in trade there and will result in better prices for our products, particularly food. Moreover, it must be remembered that largo quantifies of wool and even dairy produce have been held back by farmers in the hopes of better times. When they are released, th<} resultant increaso in the farmers' spending power will improve conditions here.

"One serious question can bo asked. Why are the banks holding large reserve!) of gold in Wellington when the London banks aro finning tho balance of trade difficult to cope with? They may have a good reason for it," Professor Belshaw concluded, "but my opinion is that they have littlo use for it here. . It is a sheer.waste of capital and it,means the expensive loss of interest."