TRADING POSITION

Otago Daily Times, Issue 23558, 22 July 1938, Page 10

TRADING POSITION

STABILITY OF THE DOMINION PRIME MINISTER’S CONFIDENCE PURPOSE OF STERLING FUNDS (From Our Parliamentary Reporter) WELLINGTON, July 21. A defence of New Zealand’s trading position and the use of the Dominion's sterling balances was made by the Prime Minister (Mr Savage) during his speech in the financial debate in the House of Representatives to-night Much of the talk about adverse trade balances and fears for the future, Mr Savage said, was deliberate political propaganda aimed against the Government.

“ The Government is attacked because the trade balance is not larger,” the Prime Minister said. “ They tell us that imports are too high and that we must cut them down. My view of the trade balances may be elementary but I will try it on the Opposition. They apparently do not appreciate the fact that a country’s exports must be used to pay for its imports. We owe a considerable amount of money abroad. Members of the Opposition should know that. They borrowed the money. The interest today on the public and local body debt due overseas amounts to about £6,250,000 sterling annually. That means that if we are to pay our way we must at least have a favourable balance of exports to that etxent,

“It does not matter if once in a while this balance is not achieved.” Mr Savage continued. “ Over a series of years the position must adjust itself. Last year we did not quite strike the necessary balance of £6,250,000 sterling. Actually the balance was about £5,500,000 sterling, but we had an accumulation of funds abroad sufficiently large to enable us to meet our demands.” Previous Adverse Balances

The position last year was not serious, the Prime said. There was already ample evidence of a slackening off in imports, a position which had been predicted by the chairman of the Bank of New Zealand in his annual report. Opposition members would, however, probably be surprised to learn that during the 11 years between 1921 and 1931 there had been adverse trade balances on six occasions. In 1921 the adverse balance was £19,000,000, in 1926 it was £4,250,000, and in 1927 it was £2,500,000. A Government voice: Who was Prime Minister then? “It was the right honourable member for Kaipara,” said Mr Savage. “It was the man who got things done. He sefems to look annoyed.” Mr J. G. Coates: You have interrupted a very interesting story. I was reading. There had also been adverse balances in 1930 and 1931, Mr Savage continued, and it was only when the previous Government entered on its depression policy of deflation and a cessation of borrowing that there was an unbroken series of favourable balances. During the previous 11 years Governments had carried on by borrowing abroad to the extent of £59,000,000. Under the Labour Government exports had exceeded imports in terms of sterling by just under £10,000,000 in 1936, and just over £ 10,000,000 in 1937. Over three years the country had more than paid its way and that position had not been achieved at the expense of the poorer people. Trade With Britain

The Financial News in London had recently made the statement, Mr Savage said, that the fall in New Zealand’s sterling balances was accounted for by increased imports, mainly of foreign motor cars. An examination of the figures would disprove that argument. “During the depression,” he said, " this country practically ceased buying metals and machinery. We were forced to live from hand to mouth and to go without capital goods. Their value dropped from nearly £10,000,000 in 1929 and £9,500,000 in 1930 to £4,000,000 in 1932 and £4,500,000 in 1933. In the first two years of the Labour Government the value of the same type of goods rose to £25,500,000 in the aggregate. The leeway is being made up And the British manufacturer did not do too badly out of it, either. He supplied about 60 per cent, or about £15,000,000 worth of these capital goods.” As for the charge about foreign motor cars, Mr Savage continued, the figures showed that in 1937 the motor vehicles imported were valued at £7,000,000. That was certainly a record figure, but of the total £3,900,000 was in respect of cars from Britain and £2,100,000 in respect of cars from other British countries.

“So far as the United Kingdom is concerned,” the Prime Minister added, “ its share of the import trade into New Zealand has increased very materially in the past six or seven years. There has been a considerable diversion from the United States to the United Kingdom, and purchases from Britain would increase still further if British manufacturers could supply more of the goods which we need.”