CREDIT CONTROL

Poverty Bay Herald, Volume LXV, Issue 19825, 30 December 1938, Page 5

CREDIT CONTROL

DOMINION SCHEME OVERSEAS TRADING BIG DROP IN BALANCE ' ;f ' INTEREST COMMITMENTS t Special to tho Herald.) WELLINGTON, this day. The leading Customs officers of the Dominion have been spending a somewhat dull but extremely busy Christmas in Wellington, preparing the- details of the new machinery for complete control of New Zealand’s overseas finance by means of the system of export and import permits. Importers are meanwhile anxiously awaiting tlhe issue of the first batch Of import permits, for these should commence to disclose the extent to which the Government desires to curtail the spending of New Zealand’s overseas income, and, still more important, the particular direction in respect to which the cutting down must be applied. Will it distinguish between luxuries and necessaries? Are the recent trade balances between countries, to be taken into consideraThe answers will be on the im-port-permits. New Zealand’s overseas trading position for the 10 months ended on October 1 3l disclosed l that, with only two months left of the year, the Dominion had only built up a favourable trade balance on its overseas business of £5,388,000. This balance was £10,500,000 in the previous year and over £12,000,000 in 1936. Probable Balance December, which has yet to be brought into the calculations, is a month -when the excess of exports, over import values commences to show up prominently, this position continuing during the active months of the export season. However, it is scarcely possible to show more than a £5,000,000 credit when the year’s trading figures axe available. Highly important, but difficult to assess, are the “invisible” items in the ttade balance figures. These include the cost of overseas transport on exports, insurance of the produce, and the annual interest bill on debt held outside the Dominion. Interest on .public debt held by overseas investors —largely British — amounts to £5,341,000 per annum, while the local bodies have an interest -bill of approximately £1,100,000. Almost equalling these charges is the freight and insurance cost on the country’s exports, estimated at over £6,000,000 per annum, and almost entirely earned by British companies, so that in addition to our heavy purchases of British goods, we are entitled to this additional credit for buying many millions of pounds worth of British services. Great Disparities Analysis of the trade balance j figures discloses the great disparities in the balances in respect to different countries. Here are some of the adverse -balances of the' last 10 months: —’ Australia £4,382,204 United States £4,324,014 Canada £3,192,813 Dutch East Indies .. £1,702,179 Fortunately these figures -are effectively counter-balanced by the highly favourable trading relations with only a few other countries. The favourable balances are confined to the United Kingdom, £20,021,709, and France, £733,091. Taking the British Empire as a whole, the trade balances are favourable to the extent of £10,961,000, while -there are unfavourable balances in connection with foreign -countries totalling £6,800,000, fortunately brought back to the credit side by the overwhelming advantage which the Dominion receives through its exports to Britain. Examining more closely the items involved in the unfavourable balances, it is evident that New Zealanders’ motoring requirements turn the scales, Australian Supplies Australia sends to this country a large variety of goods, 10 months’ imports including iron and steel to the value of £376,740; timber, £177,589; raisins and sultanas, £180,444; paints, £120,651: electrical machinery, £132,413; and fencing wire, £57,957. Motor cars, lorries, and motor spirits account for well over £1,000,000 in value of United States exports to the Dominion, and other leading items are electrical machinery, £173,618; wireless equipment, £112,779; sulphur, £149,529; and agricultural machinery. £80,815. Motoring requirements figure in the Canadian business to the extent of £1,676,386. Canada in 10 mpnths also sent printing paper valued at £324,786; other -papers, £117,873 electrical machinery, £167,268; boots, shoes and slippers, £143,541; and apparel, £109,487. The large -adverse trade balance in relation to Dutch East Indies has two causes* Imports of petrol worth £BOI,793, and of sugar to the value of £367,669. There is no reason to explain the causes of the highly-favourable trade relations with Britain, but it is interesting to note that although France takes none of our foodstuffs which are exported, it bought, during the year 1937, wool valued at £943,000.