THE COUNTRY’S TRADE.

Otago Daily Times, Issue 19791, 17 May 1926, Page 10

THE COUNTRY’S TRADE.

AN ANALYSIS OF STATISTICS. Written for the Otago Daily Times. By F. B. Stephens. 111. IMPORTS. The question of imports is much more complicated than that of exp ts, invoking, as it does, not only problc s of competing Ideal industries, not only questions of Customs duties, both protective and revenue-producing, but also the very imj rtant iactor of Imperial preference. T‘c. alue of imports has been steadily rising, till last year we have a condition of affairs second only to that of tne fateful ar 1920, The imports have risen from £35,000,000 in value in 1922 to £52.000,000 last year. i t The question naturally arises: “Why do imports increase in such a way?” it is not at'all easy of solution. The .mires, after a marked increase in 1920, showed a steady decline in 1921 and 1922, but since then they h .ve --isen gradually, til! they re now in excess of what is dcem. d safe from a financial point o. ,1c . When we ask tae economist the reason of these regular fluctuations, he learnedly speaks of “trade cycles”—an expression which conveys nothing to.the lay mind. The facts seem to Ik i follows: High ’.as f >r exports enci -e production in the particular commodities i 1 ore hindi prices reign, till eventually the supply greatly exceeds the demand. The net result is that prices fall, and the return to tho producer ic corres, ndingly less. This decn. ied return lessens the pioducer's power of demand over imported ' ,ds, and nence the importer is forced to lower pi ices to sell his goods. This must react on the importer’s profits, and for this reason, and also for tho reason that there is a liminishing demand, the imports will tend to decrease. The importers during this time of stress tend to live a “hand-to-mouth ’ existence. This was the position which obtained in New Zealand in 1921 and 1922. But falling prices for imported goods will ultimately stimulate demand for them, and prices will rise. Tho entrance of the Continent into the market for our primary prod- ’e had an immeuiatc effect upon prices obtained for exports, and consequently gave the exporter great power of demand over imported goods. The result was increased imports, and importers, encouraged by the growing demand, were able to order in anticipation of prevailing high prices for exports—in anticipation, that is, of maintained ability by the exporter to purchase. But the rising prices for exports, again have the effect of stimulating production of the commodities affected, till finally, supply outgrowing demand, a fall in prices for exports is again caused. This does not react immediately on imports, which still for a time remain at the rate which was justified by high purchasing power. The result is that imports during this transition period are generally in excess of tho norma! ratio borne to exports. As stated above, the imports last year totalled £52,425,757 (excluding specie, of which £30.(150 was imported). It may be suggested by some that the real explanation of this large increase of imports is to be found in the existence of soaring prices, but inspection of the figures of quantities and values of imports does not substantiate this view. The real fact seems to be over-importation. It is just there that the banks come in and prevent a financial debacle. Much criticism was levelled at these institutions, when on a previous occasion they raised the interest rate and called in overdrafts. Why do they so act? Firms importing heavily require to have their shipments financed, till, by the realisation of them, they are in possession of funds to pay for them. In normal limes banks advance on security against such shipments, and so foster trade. When over-importation starts, the banks naturally expect a fall in the selling price of imported goods. That means that importers will have more difficulty in raising funds to repay the banks for their advance against the cost of the goods. lienee, on account of the added risk, tho banks first raise the rate '£ interest on such advances, ami then begin to refuse to finance where the return is doubtful. The result if that importers, unable to finance their own shipments and unable-to obtain more than a certain advance from the bank—and that advance at a high rate of interest— naturally must reduce their importing. Thus the wise use of this control of finance by banks has a wholesome effect on Imports, and tends to restore the normal balance of trade. Excepting for a gradual all-round increase in values, the imx>orts last year of apparel and’ such like goods show uo marked change over the 1024 figures. This item accounts for about two and a-half million pounds. Erapcry (which includes woollen, cotton, and other textiles) shows an increase of half a million xiounds over the previous year's figures, and now stands at about five million pounds. The imxiorts of Bilk, on which the duty was altered from 20 per cent. British preferential and 30 per cent, foreign ad valorem, to 10 per cent. British preferential, and 15 per cent, foreign, show a rather marked increase since 1021—viz., X 921 £328,960 1923 643,131 1921 719T29 1925 • • • • 839,297 The item “Boots and shoes and materials therefor - ’ is particularly interesting in view of the added protection given to the Dominion's industry by the 1021 tariff. Before 1021 the duty for British countries was:—Fifteen per cent, ad valorem plus Is 6d per pair (men’s boots). Is per pair (ladies) and 6d per pair (children’s over 7's). The foreign duly was;— Twenty-two and a-liaif per cent, ad valorem plus 2s 3d i>er pair (men’s). Is 0d per pair (ladies), ami 9d per pair (children's over 7). Certain children's shoes were, and still are, free, if British. The duties imposed by the 1921 tariff were 25 per cent. British preferential, 35 per cent. Australian. and 45 per cent, foreign. This, as will be seen, is a considerable increase upon former duties. The idea of this increase, of course, was to protect and hence foster development in the New Zealand industry. The figures arc:— z Before 1921 tariff. 1920 £1,443,879 1921 531,135 After 1921 tariff. 1922 7-29,622 19-21 1,200,681 1921 975,951 1925 .. .. .. .. •• 1,069,821 The above figures suggest that, despite adequate protection, th G New Zealand manufacturers are still failing to cope with local demands, ns, taking into consideration the fact that 1920 was th e boom year, we sec that imports are practically as great since as before the additional duty was imposed. Tho metal manufactures in 1925 ranged about tho same figure as 1924, being about £12,000,000, ns against £10,000,000. Tho flnrtntion here is relatively unimportant, hut is interesting as showing tho general upward trend of imports. A careful scrutiny of detailed figures seems to show that prices have fallen, and that tho increase is accounted far hv greater quantities; but a definite conclusion on this point is impossible owing to tho very limited data at present available. One item of interest is electrical machinery, which amounts to £2.098.299. It may be of interest to remark that abotit 75 per cent, of this came from the United Kingdom. The imports per annum under this head have practically doubled since 1922. The increase is due to the huge hydro-electric schemes which are just now being carried out. That New Zealand still maintains its place as a ten-drinking couniry is shown by tho fact (hat last year wo imported 16,834,6161 b of that commodity. worth £944,639. Sugar values have fallen considerably, hut hnstv conclusions must not ho drawn from published figures, for tho bulk of this item is made up by raw sugar imported into Auckland from Fiji, Tho fall in values ns shown by the following figures has been reflected in retail prices. Tho figures are ; cwt. 1924 . .. .. 1,295,908 £1,594,342 1925 1,463,950 1,259,343 Figures concerning spirits and alcoholic liquors always arouse interest, and it is not uncommon to see both parties in the prohibition issue use the same figures to prove conclusions that are totally opposite. The value of spirits imported last year was £891,958. being about what is normally imported. Of this total, whisky accounted for £734.111, representing 602,643 gallons. This would moan to the Government n revenue of at least £1,000,000. Beer and kindred products arc very little imported and show the comparatively small value of £22.136. This fact is due. no doubt, to the high efficiency of tho local organisation of production and distribution. The

figures for wines were 227,200 gallons worth £i41,1£6. The value of cigarettes and tobacco imported has been gradually increasing from i1,000,C00 in 1921, till our imports of these goods were worth £1,791,950 last year. Of this total, cigarettes accounted for £300.927, representing 1,377.8301 b. Of cigars, there were imported 34,0501 b worth £31,244. while tobacco—cut, plug, and unmanufactured — was imported to the extent of 5,171,2891 b. of a value of £959,779. Several other items require more than passing notice. The fact that 1,352,244 centals (worth £798,090) of wheat were imported last year, raises a serious question. The bulk of this wheat was imported by the Government, duty free, with the object of seeking to make up deficiencies in local supply. But why has local supply failed? Guaranteed prices have evidently not had the effect of stimulating production, and a difficult problem faces us. if, in any season, the Australian crop should fail. Oats, of which there were large importations from Canada in 1924, fell from 427,919 centals worth £179,540, in that year to 39,436 centals. worth £20,209 last year The marked rush to import flour immediately the embargo on its import was lifted suggests dissatisfaction on the part of consumers with local market'. Doubtless the policy of fostering the milling industry has tended to produce artificial prices which must ri"ht themselves once free competition with outside markets has had time to have its natural effect. The tariff of 3s per cental provides considerable protection to local miller-' bo imports for 1924 and 1925 are as under: Centals. 19-21 .... .. 26 £22 1925 161,111 124,229 It may he of interest to remark that the figures for the first three months of this year show the same tendency as last year's, the figures being 64,995 centals. worth £47,928. The importation of motor ears has claimed attention during the last few months. Without a doubt this is the age of the motor, and it is evident that the field for it is an ever-widening one; hut the question naturally suggests itself, after a glance at the figures; “ Have we not come yery near to a satiety point, takin" into consideration the stage of the country’s development?” That people are still prepared to buy motor cars is shown by the following incident. A motor car company retailing a popular car ran a competition among its salesmen during the month of March last The prize, a gold watch, was to go to the employee who made the most sales of new cars — no sa le to he counted unless delivery were taken. The winner sold 27 cars and tho second made 24 sales, while numbers of smaller quotas were recorded This fact speaks for itself. In this connection, a recent cable from the Canadian Bureau of Statistics states that New Zealand was Canada’s second best customer for motor cars last year. This statement, officially made, gains weight when it is remembered that the majority of cars imported into New Zealand are of Canadian manufacture. That the tremendous importation still continues is proved by a reference in our first article to one shipload of cars containing 4850 cars, worth £885,000. The figures for the imports of motor vehicles, motor cycles, accessories, and tyres for the past six years are, to say the least, astounding:— 1919 £2.244, T4i X 920 5,266,809 1921 2,227,030 1922 1,527 326 1923 3,494,402 19-24 4,567,496 1925 (not Jess than) .. 5,800,000 The total for the seven years is at least £25.000,000. For actual complete motor cars imported during the past two years the figures are: — Number of cars. 1924 18,633 £3,541,635 1925 22,330 4,146,433 The above figures hear out the contention that too many motors are being brought by people wholly unable to run them and pay their just debts as well. Tyres for motor cars have come into the country in a way hitherto unparelleled and reached last vear the huge sum of £1,148,075, as against £595,825 in 1924. It may be noted in passing that the duties of 10 per cent, on British tyres and 25 per cent, on foreign tyres do not form part of the consolidated revenue, but go to the Main Highways BoaT for tne 'tvcrk of road formation and repair. The importation of oils wlrch arc used for the propulsion of motor cars shows still further the vast amount that is being spent on this branch of imports;--Gallons. 1924 28,989,126 £2,212,035 1921 33,175,188 2,353,511 In addition to this, residual oils for driving oil-burning vessels and heavy tractors show in 192“ the figures of 21,667,380 gallons, worth £278,575. Final!'", mineral lubricating oil, of whicli probably the greater part finds its way n-.io the motor world, accounted for 2.248,753 gallons, of a value of £255,674. From rue atiove wc see that the amount spent in importing motors, accessories, and requisites totalled last year approximately £10,090,000, and the question yjiich we Jiali seek to solve later is “Is this excessive?” Especially of interest at the xiresent time in view of the great movements in the direction of afforestation, is the question of timber imports. A survey of the figures shows an interesting position, . 1924 .. .. £1,043,829 1923 1,196,340 The bulk of this timber came from Australia, while the western coast of North America supplied the great hulk of the remainder. It. is instructive to no*c, that our oxiiorts of timber last year totalled £573.879, of which white pine, shinned to Australia, formed the greater part. The coal industry presents a series of figures worth studying* in view of the recent commission of inquiry into the merits of New Zealand coal as a steam coal on the State Railways. It will remain to lie seen if its recommendations arc x>ut into practice; for, if they are, we may expect to sec a marked drop in coal importations, seeing that practically all coal imported is for the railways. Last year 572,573 tons of coal, worth £682.511, were imported, and this represented' about 25 per cent, of the coal consumed in the Dominion.