REACTION ABROAD

New Zealand Herald, Volume LXXV, Issue 23218, 12 December 1938, Page 13

REACTION ABROAD

GERMAN PRESS VIEW MORE LONDON OPINIONS A SERIOUS PRECEDENT (Received December 11, 5.5 p.m.) LONDON, Dec. 10 The Boersen Zeitung, says a message from Berlin, describes Now Zealand as a "black sheep" for adopting currency control and State direction of foreign trade without which it says there is no remcdj' for economic and liberal illnesses. London regards it as a serious precedent through fear that Australia and South Africa may follow New Zealand's example. It is recalled that the same methods when adopted by the authoritarian States were condemned us evidence of warlike intentions. The Economist says New Zealand begins to experiment in controlled exchange advantageously. "In the first place," says the paper, "her insularity and the distance from other territories enables her to tackle the smuggling of currency, tending to arise under control. "Secondly, the population does not generally distrust the currency. Thirdly, the market for the New Zealand. pound has been centralised in a few highly-respected banks, which do not lend themselves to the evasion of official control. Danger of a "Black Market" "Nevertheless, an unofficial or black market will almost inevitably develop, and might reach appreciable proportions if an unsound financial policy rendered controlled exchange artificial. Such a black market could be fed through external investments, provided that the operation was not too dangerous. "Thus the control scheme depends less on tho effectiveness with which it is worked than on tho manner in which fundamental economic problems are tackled. "If the Government tempers grandiose public works and social schemes with caption, and enjoys good export prices, the* control may prove a valuable temporary expedient to tide over difficulties, but Mr. Savage has gone far to shatter this hope by the insulation declaration. If the control is merely an evasion of fundamental issues this obviously will be a much graver crisis than at present.*" Mr. Savage's Insulation Plan

The Financial News says Mr. Savage's latest utterances show that the import restrictions are not any emergency device to protect sterling funds until the danger of over-importing is removed, but a permanent expression of the Government's insulation plan. Nevertheless insulation is impossible, especially for New Zealand, which is a specialised producer, selling its output abroad. If incomes are, kept up by lavish spending, the depreciation of the currency is inevitable when the external assets are used up, while an endeavour to postpone the evil day by the subsidisation of exports will enormously strain the national finances. Also, it will be likelv ultimately to produce monetary inflation, accentuating the depreciation of the currency and reducing the standard of living by making imports dearer and increasing the internal burden of external debt charges. , This is elementary economics, which it is not a disservice to point out to Mr. Savage. "We trust Mr. Savage will not insulate himself from friendly warnings," the paper adds.

AUSTRALIAN EXPORTS CONFUSION IN TRADE PROBLEM FOR TOURISTS EXCHANGE RESTRICTIONS SYDNEY, Dec. 10 The Sydney Morning Herald says the export business from Australia to New Zealand will be brought practically to a standstill until the manner in which the New Zealand Government intends to apply its restrictions on imports is known. A few large transactions for export trade purposes were put through yesterday in cases where it was certain that permission to import would be given by the New Zealand Government. The exchange restrictions in New Zealand have caused some concern to tourists, who want to know how they stand with their letters of credit, the cashing of which is essential for financing their holidays. Some notes of the Keserve Bank in New Zealand were presented to the bank 3 in Sydney yesterday and. Australian currency sought, but invariably exchange was refused. The banks are prepared to sell New Zealand currency at the rate which has been quoted for some weeks past, namely, £IOO New Zealand for £IOO 10s Australian, but they are not prepared to buy New Zealand currency.

NEW REGULATIONS DISCUSSION BY IMPORTERS MEETINGS IN WELLINGTON [by telegraph—press association] WELLINGTON, Saturday The executive of the New Zealand Importers' Federation meets in Wellington on Tuesday, when delegates from the four centres will consider the new import regulations. It is expected that various matters requiring attention and interpretation will l)e submitted subsequently to the Minister of Customs or tlio Controller of Customs. The council of the United Kingdom Manufacturers and New Zealand Representatives' Association meets on Monday morning for further discussion of the new licensing regulations. The secretary, Mr. N. H. Russell, said today that after Monday's deliberations the council will probably be in a position to communicate information to members.