The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, MAY 25, 1928. LOANS AND EXPORTS

Southland Times, Issue 20495, 25 May 1928, Page 6

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, MAY 25, 1928. LOANS AND EXPORTS

Criticism of the Government’s borrowing policy is useful even if it does no more than draw attention to the size of the Public Debt, and the manner in which the country is meeting its obligations, but we doubt if Mr W. J. Polson is doing very much more than that in his statements to the members of the Farmers’ Union. It is quite true, as he says, that since the war the national debt of New Zealand has been increased, with a consequent increase in the amount of interest to be paid annually, but a substantial portion of that interest remains in the Dominion and that sum contributes to the revenue of the Government The point is of importance when the relationship of interest charges and the margin of exports over imports is examined, because one item represents an impost on revenue exacted by the State from its own citizens while the other is the burden carried by the country in meeting obligations to moneylenders overseas. It is clear that the excess of exports over imports represents the money with which New Zealand meets her obligations, but while the actual cost of imports can be gauged through the Customs entries, is it quite clear that the export figures give the full value of goods sent out of the Dominion? Wool sold in this country so far as New Zealand is concerned is unaffected by later prices, but goods sent to the London market on consignment have their actual values to the Dominion governed by the movement in prices, and these are not shown in the export figures. Payment for services must be included in this country’s exports, a point which Mr Polson has overlooked. Every penny of commission paid to agents in this country by foreign houses must be included in the exports, along with capital brought into the Dominion by tourists. In the year these represent a substantial sum and they cannot be ignored. Mr Polson and Mr Downie Stewart are certainly in agreement on the importance of the excess of exports over imports, but they do not agree on the size of the margin, nor on the manner in which it is to be determined. For instance, Mr Downie Stewart states that when loans take the form of credits for goods bought, the goods are shown as part of the imports, and if that is done the capital represented in the loan must be regarded as a qualifying factor. If an individual buys a motor-car and the seller lends him the purchase money, the buyer does not owe for money and car simultaneously. If he is regarded as owing the money, the car is his property clear of debt. On the other hand if the car is an import, the credit is an offsetting export. The question, of imports and exports is too complicated to be settled in the rough and ready method Mr Polson uses. We do not depreciate the value of the Government Statistician’s figures, but they are not enough to disclose the actual margin of exports over imports, because while the latter figure is quite up to the level of the actual values, the export values cannot be accurately gauged and are an understatement. It is by no means difficult to prove through these trade figures that New Zealand is heading for bankruptcy, but when London financiers put their money in New Zealand loans they do so because they are satisfied with the financial strength of the country. They do not limit their investigations to the Government Statistician’s trade figures, a fact which should make Mr Polson suspect that his calculations having proved too much may have omitted certain important factors. That, we think, will be found to be the explanation of his failure to agree with Mr Downie Stewart.