THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 21, 1930. SAFEGUARDING THE FUTURE.

New Zealand Herald, Volume LXVII, Issue 20596, 21 June 1930, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 21, 1930. SAFEGUARDING THE FUTURE.

There has been imposed upon the chairman of tho Bank of New Zealand, by a custom too long established to be broken, the responsibility of annually surveying the material progress of the Dominion and of forecasting the trend of its development. The task may be pleasant when the retrospect is one of placid prosperity and the auspices reveal no cause for misgivings. On this occasion Sir George Elliot has had to review a period in which the course of events has been interrupted by cyclonic disturbances of an intensity unknown for over twenty years, creating a turmoil in which the whole world has been involved, and because of the increasing elaboration of modern civilisation, producing results probably more aggravated than any parallel experience in the past. Though these adverse forces seem to be approaching exhaustion, the situation is still obscure, and since New Zealand has been proved to be economically, as well as geographically, remote from the effects of international movements, it is too soon to predict with any confidence that the worst is past. Sir George Elliot has, therefore, devoted his address mainly to a remarkably comprehensive survey of economic conditions, international and domestic, illustrated with a wealth of carefully selected information, and has offered definite conclusions and counsel only upon certain aspects of the immediate outlook in which a course of action conducive to the welfare of the Dominion can be prescribed with confidence. Within this field of his observations, the matter to which he has particularly directed attention is the need for adjusting the life of the Dominion to the prospect of a substantially lower level of commodity prices than have ruled for a decade and a-half. On no point is he more positive than in his warning that " continuing low prices " must be expected; not the persistence of the precipitous decline of recent months, but such as may be expected from " the natural movement toward a return to pre-war commodity values." Accommodation to that condition will not be easily accomplished, especially as the degree of inflation to which he refers has been artificially sustained during a period in which remedial measures have been operating in other countries. The first step is to check public and private extravagance. There is abundant evidence of the former in the multiplication of State and municipal borrowing and of its persistence in the reckless fashion in which the national credit is being strained to finance expenditure upon unnecessary and actually useless works. The fallacy that mere spending is beneficial has deluded both public authorities and individuals, and both find an easy excuse for extravagance, whether in State and municipal activities or in personal gratification, in the doctrine that any kind of expenditure provides employment. In pursuit of that dangerous policy, taxation has been enormously increased, money has been devoted to making work while productive avenues of investment have been neglected, and following this example, individuals have fallen into habits of improvidence that cannot be indefinitely practised without injury. Sir George Elliot has resisted any temptation to present such a picture as would appeal to the unthinking optimist, and has preferred to warn the public that if hardship and worse is to be avoided, a real effort must be made to safeguard the future, both by meeting the difficulties that now confront the country and by taking intelligent measures to strengthen the foundations of its economic prosperity. As a practical illustration of the opportunities that are now neglected, he has mentioned the unlimited possibilities of increasing the productivity of the dairy herds by the systematic use of supplementary foodstuffs, now denied to the industry by a prohibitive tariff duty. This subject was exhaustively discussed in" the first report issued by the Committee on Unemployment. It went further, advocating the development of the pork and poultry industries on a scale commensurate with what Denmark has accomplished. As an essential condition, it recommended the abolition of duties on all stock foods, including grains not suitable for human consumption. The possibilities in this field arc revealed in the report. Denmark sustains more than double the population on onesixth of the area of New Zealand. It exports dairy produce to the value of £25,000,000; pork and poultry products amounting to £29,000,000. Far from regarding independence in regard to breadstuffs as essential to national security, Denmark imports grains to the extent of £20,000,000 annually, and £17,000,000 worth are devoted to stock feeding. It is scarcely necessary to add that all grains and fodders enter Denmark duty free. This is only one example of the direction in which industry and production may be stimulated in New Zealand simply by removing unnecessary obstacles to private enterprise. For several years successive Governments have been striving to euro unemployment by methods that not only have been expensive palliatives, but appear also to have aggravated the evil. Yet, as Sir George Elliot has reminded the Government and the public, they have only to look at Australia to see an image of New Zealand's fate if a halt is not called. With its great advantages, the Dominion can surmount the temporary difficulties arising from even acute, world-wide depression, but its recovery will only be impeded by State experiments that absorb resources which could and should be employed in developing assets of incalculable value.

DIRECT TRADE WITH JAPAN.

A very interesting suggestion, that of a direct shipping service between New Zealand and Japan, was made yesterday to a meeting of Auckland merchants by the Australian representative of a Japanese shipping firm. As things are, there is a considerable volume of trade both ways, but it goes and comes through Australian ports, entailing delay, a certain amount of damage and loss, extra freight, charges for double handling, and added insurance costs. A direct service would mean economic advantage on both sides, and the offer tentatively made merits very sympathetic discussion. It is to be noted that for typical products of New Zealand there is a very promising potential demand in the East. Already it is effective to some degree, the exports to Japan last year representing a value of £428,000; in 1926 the value was only £162,000. This amount is apparently capable of considerable expansion. On the other hand, imports from Japan have met a demand here. An increase of this commercial intercourse, providing it brings in its train no prejudicially disturbing influence on New Zealand industries, is to be encouraged, and the economies to be effected by cutting out the transhipment in Australia are so obvious that the idea of a direct service is to be welcomed. There does not seem to be any serious likelihood of an increase in the volume of import trade having any prejudicial result, for the main lines making up the present list of Japanese imports are not competitive with New Zealand industries. In any event, if that increase in volume of imports is associated with a growth of exports in meat, butter, cheese, wool and woollen goods, in demand by the teeming populations of Japan and China, great gain would accrue here.