THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, DECEMBER 8, 1938 TRADE CONTROL PLAN

New Zealand Herald, Volume LXXV, Issue 23215, 8 December 1938, Page 14

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, DECEMBER 8, 1938 TRADE CONTROL PLAN

However clearly the Government's action to control imports, license exports, and mobilise exchange resources was foreseen, its actual arrival has naturally aroused many emotions. It is one thing to realise that something of the kind must come, quite another to wake in , the morning to find it has been made an accomplished fact. Viewed simply as a method of dealing with emergency conditions—and the plan contains a large element of that, whatever may be said to the contrary—it is an extraordinary measure of restriction and control at a time of high prosperity. When Australia imposed a drastic policy of import regulation, including many actual embargoes, some seven years ago, it was done to meet severe depression conditions. New Zealand has not had that spur to action. However, this country is face to face with something very similar, and must now take stock of the probable consequences. To avoid making them too disruptive, it is essential that there should be moderation and care in operating the plan. To regulate imports in too drastic a fashion could bring very serious reactions. The yield from Customs duties would immediately fall; there would be no lag before that result made itself felt, and revenue prospects would be fundamentally altered. Some volume of unemployment would be another consequence that could not be escaped. It is idle to talk of cutting out luxuries as though it meant only depriving people of 1 superfluities with which they could easily dispense. The livelihood of thousands is bound up in supplying and servicing what might easily be classed as luxuries. Cutting off the supply abruptly would immediately transfer these people to the unemployed ranks, and their reabsorption into other occupations would not necessarily be easy. Theoretically, the fostering of local industries which is proclaimed as part of the plan should provide alternative employment for those whose present occupations may be affected by a reduction of irpports, but theory and practice do not always fall into step smoothly or immediately. Another proposition, the diverting of New Zealand's overseas purchases, so far as possible, from foreign countries to Great Britain or other parts of the Empire, will not be so easy to effect as to suggest. It will have to be approached with care, for everybody cannot switch over at a moment's notice. Some hint of what inay yet have to be considered in this context can be found in a very moderate word of comment spoken by the French Consul in Wellington. He has pointed out that many of the commodities New Zealand takes from France are in the luxury class, | and therefore particularly exposed to restriction. On the other hand France is a considerable buyer of New Zealand exports, especially wool. He made no specific claim to consideration on that account, but he has raised a point on which more may yet be heard from other quarters. It must -be taken into account, too, in considering further the policy of fostering secondary industries. So far as they succeed their products will displace the output of industries in countries which buy largely from New Zealand. Actually the industrial ambitions that have been mentioned will not necessarily be fulfilled smoothly or easily. Athwart their course to success lie internal conditions recently and deliberately created by the present Government. Chief among them is the rigid restriction of hours. France has found the 40-hour week an almost insuperable obstacle to an expansion of industry because of its bearing on the cost of production. New Zealand is likely to taste a similar experience. It is the Government's responsibility to face such difficulties, lest the plan to foster industry at the expense of imports ends in a severe, intractable rise in the cost of living.

To discuss the development of industries implies that there is more ahead than a temporary expedient to meet an emergency. The Prime Minister has confirmed this impression 1 by his comments, which go much further than Mr. Nash's explanation of the new regulations. Mr. Savage speaks of a long range plan, considered for the past two years, and hints that it is a large instalment of his insulation proposals. That conception requires a readjustment of ideas based on the mere imposition of measures to meet the depletion of London funds. A profound change in the very basis of New Zealand's economy is implied, and the country must consider the new conception seriously and thoughtfully. New Zealand, apparently, is about to take a long step toward the form of closed economy which is developing largely elsewhere, especially in the avowedly totalitarian States. Two points emerge from the situation. The Government is putting on its own shoulders a tremendous responsibility in undertaking to determine what shall be made in tho country and what shall be imported; to some extent, indeed, what the people shall consume and enjoy. It is preparing to fashion the life of the community to an extent and in a detail never attempted before. The people must expect to have their buying and their selling, their work and their play regulated by official decision. This is no exaggeration, it is the certain consequence of the new plan as amplified by the Prime Minister. The fall of London funds has precipitated action, but with this as an impulse tho march of the State toward complete control over* the lives of the people goes on at a faster pace..