POST-WAR TRADE

Otago Daily Times, Issue 25394, 27 November 1943, Page 6

POST-WAR TRADE

PROBLEMS FOR THE DOMINIONS PROMINENT BANKER’S VIEWS Speaking at the annual meeting yesterday of the Bank of New South Wales, Sir Robert Gillespie, president of the bank, dealt with some of the problems of post-war trade which would affect both New Zealand and Australia. In both countries he foresaw some painful adjustment of manufacturing industries. Despite _ expan--1 sion of manufacturing industries during the war, New Zealand remained essentially a primary producing country dependent on overseas markets. In Australia the problem would be more complicated. A large proportion of secondary industry had grown up under tariff protection and expansion during the War had been rapid. How much industrial development could Australia retain in any system of intei; national collaboration? If the Great Powers decided on a policy of fipci international trade, downward revision of tariffs would be necessary. In othci words, the right of survival of secondary industry, both in Australia and New Zealand, would be decided by lit* capacity to meet external competition Keen Competition Assured

Even with rising standards of living throughout the world. Sir Robert said, Australia and New Zealand would face keen competition with other countries. Their export markets were likely to contract unless their production costs compared favourably with those of oversea producers. It was important to realise also that many artificial markets p.o vlded bv the war would cease to exist afterwards. Resort to isolationism would magnify the difficulties. In the direction of international agreements based on freei interchange of goods and services lay the Greatest hope. , , The problem of readjustment was, Sn Robert said, further complicated by current developments. Over-employment ot resources was creating large arrears of capital maintenance, and stocks of consumption goods were running low Alt the war the question would be whether to build up stocks or to reconstruct capital equipment. The latter course was likely to be less popular, but it would give greater promise of permanent economic stability. Such items as housing would of course, receive high priority after the W “ r The outstanding war-time development in all democratic countries," said Sir Robert, "is the extent of governmental participation in production. In line transition from war to peace the retention of some government controls will he necessary. But even after that I believe State intervention in economic affairs will be greater than before the war, because of international economic developments and the assumption of additional responsibilities by the State for the welfare of the community. But State intervention is not necessarily incompatible with private initiative. The right of 'the State to formulate the broad lines of economic policy must be conceded, but on the other hand private enterprise should carry out the details of that policy. There is, however, a danger that, the Government, in devising controls to limit private enterprise, will strengthen the interests of bureaucracy. Bureaucratic control is expensive and tends to destroy enterprise and efficiency; to that extent it raises costs and lowers the standard of living. Factor of Initiative “ History shows that under private capitalism production costs are minimised technical progress is most encouraged, and the highest standard of living is enjoyed, Sir Robert said. “ The greatest efficiency ensues from enterprise which springs from individual initiative, when rewards are commensurate with the mental and physical effort expended, and the risk of loss spurs personal endeavour. Public enterprise must necessarily be less efficient than private enterprise. But the conclusion is not that all economic activity must be subject to private control. There are many goods and services which the State alone can produce because the community as a whole must meet the costs. In order to keep the standard of living as high as possible, public enterprise should be confined to that economic activity which is concerned with the production of truly communal goods and services “ Discussion of the relationship of the State to private enterprise- and of postwar problems, however," Sir Robert concluded, “ must not blind us to the fact that our war effort must be pushed on to hasten the day of victory. In recent months greater emphasis has been placed on food production and less on the production of war equipment'. A dangerous disposition is growing up to regard production undertaken for war as containing great hopes of future peace-time expansion. It should be realised that artificial markets like those provided by war will not continue to exist after the war. Production itself presents few insuperable problems, but production at a cost at which we can compete with more favour-ably-placed producers is the decisive consideration.”