CONTROL OF TRADE

Poverty Bay Herald, Volume LXV, Issue 19825, 30 December 1938, Page 12

CONTROL OF TRADE

GOVERNMENT’S SCHEME COMMENT IN SYDNEY STOPPING CAPITAL FLIGHT The Government’s trade control scheme is attracting considerable interest in Australia. The Sydney Morning Herald comments that. the Government announced its course of action before determining how it would he ne'comp'lished, but expresses the view that no blame was attachable, as had there been discussions as to how the restrictions were |o be applied, the flight of capital from New Zealand would have been .intensified. “If the Government had directed the Reserve Bank of New Zealand to raise the exchange rate with \ London, and so with the rest of the world, the increase in New Zealand pritees of imports would have curtailed imports, and the increase of prices in looally-produced commodities entering the export trade would have brought about a reduction in the subsidies paid for export,” states the article. ‘‘On the other hand, the New Zealand currency required to purchase London money for the service of the Government and local Government loans raised .abroad would have increased. A reduction in one expenditure would have been countered by the increase in another. But the political repercussions' of the increased cost of living, which would surely have come about, would have been detrimental to the Government. Probably bn this ground control wen the day. “The licensing of exports will ensure that all receipts of oversea money will be in the hands of the trading banks, and, by means of the control which the Reserve Bank of New Zealand can exercise over the trading banks, the control of oversea funds passes entirely to the Government. Exchange operations outside the trading banks and in what in Europe would be termed the ‘black’ market are thus entirely prevented.”