BLOCKED POUNDS

New Zealand Herald, Volume LXXVI, Issue 23333, 29 April 1939, Page 12

BLOCKED POUNDS

A number of questions is raised by the arrangement approved by the Minister of Customs whereby imports prohibited under the regulations will be admitted if no immediate call is made on New Zealand credits to pay for them. The system resembles Nazi economics, under which imports are paid for in blocked marks, German currency that cannot be exchanged for sterling, dollars or any other free currency. Mr. Nash is allowing the institution of blocked New Zealand pounds, and thus may gain for the Dominion a trading reputation as notorious as that of the. Nazis. This and most of the other import difficulties, hardships and scarcities could have been avoided by the Government raising a loan in Loydon to tide the Dominion over, but this course was repeatedly forsworn by the Prime Minister. Under Mr. Nash's new system,

however, a number of private London loans will be raised instead of one public loan, and the terms are hardly likely to be as favourable. Probably their cost will be added to the price of goods so imported. I u fact part of New Zealand's import trade is to be financed on long credits, and so the Dominion will go to London for money, although the process is camouflaged to save political faces that, have already • grown long enough. The expectation is that credits will be available to repay the loans—or unblock the New Zealand pounds—in a year or 18 months. But, is this expectation well founded 1 Will exchange be any easier a year or so hence 1 Commodity prices may rise in the interim and restore New Zealand balances, but they may also fall. Nor is there any sign that Government extravagance—the chief cause of the existing stringency—will be curbed, allowing the exchanges to recover. In fact Mr. Nash is permitting the launch of a very dubious financial expedient which in the long run may bring more trouble than relief. In the meanwhile Ihe small traders who lack substantial overseas backing will not be saved from eclipse. Once again the long purse is favoured.