LONDON FUNDS

New Zealand Herald, Volume LXXV, Issue 23200, 21 November 1938, Page 13

LONDON FUNDS

REASONS FOR THE FALL "IMPORTS UNDULY BLAMED" FEDERATION STATEMENT OTHER FACTORS SUGGESTED That "excessive" imports are being unduly blamed for the fall in the London funds, to the neglect of other factors, is contended by the annual report of the New Zealand Importers' Federation. While the relation between imports and exports lias a very definite bearing 011, the movement of the London funds, the report states, it is by no means the only factor that operates to increase or -diminish them, and a fall in the funds is not conclusive evidence of "excessive" imports. Quoting the official external trade figures for the three years 1936-38, and remarking that statistics of the balance of trade are notoriously incomplete and inconclusive, the report points out that the figures show a rapid rise in export values from 1936 to 1937. and then a marked fall in 1938. The relative rise in imports was greater than in exports from 19:56 to 1937. and a further considerable rise followed, with the result that the export sui'plus has diminished sharply. This movement is normal in New Zealand economic life, for reasons set out by Professor B. E. Murphy, of Wellington, in a book published in 1935. "Invisible Items" Returns of the net overseas assets of the New Zealand banking system for three years past show that they have fallen to a much greater extent than can be accounted for merely by movements in the export-import balance. "This indicates that factors other than the visible trading figures have had a bearing on the niQvement," the report continues. "These factors are probably export, of capital to Australia and Britain, perhaps some repayment of overseas debt out of London resources, and a variety of miscellaneous so-called 'invisible, items' for which statistical data are almost, if not entirely, lacking." Tables and a graph issued by the Reserve Bank for September last indicate that movements in net oversea banking assets persistently run lower, both on the up and down grades, than movements in the export surplus. This gap must be the result of other items. Imports and Prosperity "In any case," states the report, "to talk about 'excessive' imports simply begs the question. If imports come into the Dominion, that is because there is a demand for them find because the community feels that it is better off with these imports, and that its standard of living is higher than it would be if the imports did not come in. The rise in imports has been a sign of prosperity following upon increased pur-chasing-power, resulting from the larger export income, and the internal measures taken in the last few years to increase wages and spending-power. The prosperity of the people is largely measured by this spending-power, and its reflection in increased consumption, including increased consumption of imported goods. Drastic Measures Unnecessary "New Zealand is and always has been a country in which external trade — combined exports and imports —per head has been high. To complain about 'excessive' imports is simply to complain because the community us prosperous. In any case, the process is selfbalancing. It certainly should not be made, through popular misunderstanding of the facts and their significance, the reason for an unintelligent drive to raise the cost of living by further tariff increases or import control, especially if such increases or control prejudice our only dependable customer for exports, the United Kingdom. "We state emphatically that normal economic laws are operating and that there is no need for any drastic measures, if they have been considered, of any artificial form of control of imports by further tariff increases or otherwise, and we feel that the Government-rea-lises the dangers of any such drastic and unnecessary action.'