SOWING THE WIND

New Zealand Herald, Volume LXXV, Issue 23061, 11 June 1938, Page 14

SOWING THE WIND

Noting the ill effects on New Zealand's economy of fluctuations in export prices, Mr. A. T. Donnelly, chairman of the Bank of New Zea- . land, has appealed to the commonsense and good judgment of business men to reduce the impact of this influence. He mentions that values of -imports have been rising faster than those of exports and draws attention to "the trade dislocations that result from the excessive optimism generated by high export prices as well as the excessive pessimism generated by low export prices." The sequence is, of course, writ large in New Zealand economic history, although past lessons still remain unapplied to present conditions. Instead of drawing the attention of business men to trade trends, Mr. Donnelly might have addressed himself to the Government, which professes to have a sovereign remedy against the dislocations he mentions. Mr. Savage claims to "have plans ready, both comprehensive and detailed" against the onset of depression. He does not seem so concerned to prevent booms, although in them are sown the seeds of slumps. If he is unwilling to strike at the cause, he cannot expect to escape the effect. Neither Prime Ministers nor anyone else can have it both ways in this world, not even if they live in a Pacific Paradise. Far from attempting to control the upswing started by overseas market movements, Mr. Savage and his Government have accelerated it by free spending of tax revenues and borrowed money. The higher they swing the economic pendulum, the longer must be the subsequent descent. If Labour really seeks equilibrium and stability, measures to control the upward thrust should be in operation now so as to minimise recession. The trouble "is that politicians lack the courage to restrain excessive optimism and so they and the country are caught by the reaction of excessive pessimism.