SUGGESTIONS TO MR SAVAGE

Southland Times, Issue 23681, 2 December 1938, Page 7

SUGGESTIONS TO MR SAVAGE

Counters To Labour Difficulties

HIGHER TARIFFS OR DEVALUATION

MORE MODERATE POLICY ADVISED

(United Press Assn.—Telegraph Copyright)

(Received December 1, 7.20 p.m.) LONDON, December 1.

The Daily Herald, recording the abatement of the New Zealand exchange flurry which provoked the increase in the discount rate, says that a deficit of £7,000,000 to £8,000,000 is likely in the balance of payments for exports and imports but the London funds have fallen by nearly £12,000,000 —the difference of £4,000,000 to £5,000,000, measuring the amount of capital exported during the year. The Daily Herald suggests that if the socialist experiment is being built firmly it is worth considering in advance measures that might be taken to meet the fall in the export surplus or the flight of capital, if it becomes substantial.

The falling export surplus, it says, might be countered by higher tariffs on luxuries or by suitable devaluation, Which should not be regarded as a disaster but as a natural economic adjustment.

A real flight of capital could be met by refusal to grant foreign exchange for the purpose. The Daily Herald adds: “Meanwhile it would probably be wise to moderate momentarily the expansionist policy, particularly public works and loans from the Reserve Bank.”

The following table shows the net overseas assets held by the Reserve Bank and the six New Zealand trading banks and the totals of the two on the last Monday of each month of the current year: Reserve Trading Bank. Banks Total.

The figures show that there has been a rapid, continuous decline in the het overseas assets of the Dominion during the last six months, while the latest total is little more than one-half of that at the end oi last January.

According to the latest return, printed this morning, the Reserve Bank’s overseas assets have fallen to £ (N.Z.)4,828,301. The trading banks' latest figures are not yet available, but the Dominion’s total overseas assets on the last Monday of November were almost certainly less than £(N.Z.)9,000,000.

£ (N.Z.) £(N.Z.) £(N.Z.) Jan. 16,231,000 6,755,000 22,985,000 Feb. 17,249,000 8,269,000 25,518,000 Mar. 16,930,000 9,635,000 26,565,000 Apr. 18,327,000 10,290,000 28,617,000 May 18,279,000 9,825,000 28,104,000 June 16,609,000 9,516,000 26,126,000 July 15,098,000 8,238,000 23,336,000 Aug. 13,687,000 6,868,000 20,555,000 Sept. 11,432,000 5,594,000 17,026,000 Oct. 7,699,800 4,155,675 11,855,475