Taranaki Herald. THURSDAY, FEBRUARY 10, 1910. IMPORTS AND EXPORTS.

Taranaki Herald, Volume LV, Issue 14131, 10 February 1910, Page 2

Taranaki Herald. THURSDAY, FEBRUARY 10, 1910. IMPORTS AND EXPORTS.

Commenting' last week on the annual report of the Canterbury Industrial Association and the president’s remark that he hoped New Zealand’s imports would continue to decrease in proportion to the exports, we stated that if imports went on decreasing and exports increasing we should in course of time have a starved country. Further, we stated that if five or ten millions of capital was sent to New Zealand for investment every year it would necessitate our increasing our imports by that much, because the capital would not come here in the shape of sovereigns, hut as merchandise of one kind or another. Some of our readers have, we find, failed to follow onr line of argument. They do not realise that it is a country’s imports, not its exports, that enrich it. The subject is an engrossing one, albeit somewhat complicated, and possibly we have not expressed ourselves as intelligibly as we might. Therefore we return to the subject. It must he understood in the first place that absolute accuracy in counting up exports and imports cannot, be obtained, one reason being that people are constantly entering and leaving the dominion with sovereigns in their pockets, of which there is no record. It may be taken, however, that the outgo balances the income in this respect, at any rate near enough to make the balance a negligible quantity. Again we are unable to do more than guess at the amount of capital sent into or withdrawn from the dominion every year by private individuals or money-lending institutions. Hence our conclusions respecting imports and exports are liable to be inaccurate to a greater or less degree. Hut this may be laid down ns a general and sound principle, that our exports represent, broadly, payment for our imports, payment of interest on money we have borrowed, and, possibly, repayment of-borrowed money, and capital withdrawn from the dominion by investors or by people leaving the dominion and taking their money with them. Also that imports represent the payment we obtain for our exports after meeting onr liabilities for interest, etc., abroad, money borrowed abroad by the Govern-' ment, local bodies, and individuals, and capital sent or brought into the dominion for investment. Another feature which must be clearly understood is that sovereigns play a very small part in 'j

the exchange of trade. In 1898 only £19,191 in specie was imported, while £68,117 was exported, and in the last forty years the hard money brought into New Zealand (except in the pockets of people coming in, and this there is no means of - estimating) has amounted to no more than about £12,500,000, and of this nearly £4,000,000 has beeii exported again. Money, therefore, may be almost disregarded in references to both imports and exports, for it is clear that when we borrow a million or two in London it does not reach us in the form of sovereigns, except to a very limited extent. It is obvious,, also, that if we do not receive merchandise of some sort we are not borrowing at all. If we go to London and ask for a loan of five millions we must receive money, or merchandise, unless the loan is merely to pay off another loan which has matured, in which case, of course, nothing comes into the dominion and it does not increase its indebtedness; is, in fact, not actually borrowing in the ordinary sense. In order to show that when tlft; Government is borrowing largely in London the proceeds of the loan come into the dominion in the shape of merchandise we have only to quote a few figures. In the early decades of the colony, say up to 1870, a great deal of capital was coming in for investment, brought by the early settlers or sent by money-lending institutions. In the sixteen, years from 1855 lo 1870 the imports exceeded exports by over £20,000,000, and this represented chiefly capital brought or sent here for investment, though it reached us mostly in the shape of merchandise. Then for a year or two there was a lull in the influx of capital, and exports exceeded imports, until 1873, .when Sir Julius Vogel’s public works policy began to affect the figures. In 1874 the imports exceeded exports by near three millions, and in the following year by over two. This continued until 1885, the imports for a period of a dozen years exceeding the exports by about 23 millions —borrowed money coming in the shape of railway iron and plant and other merchandise, with a small proportion of sovereigns. For the next dozen years Our borrowing was light, the increase in the public debt from 1886 to 1898 being only about £11,000,000, and our exports were largely exceeding our imports. From 1900 to 1908 we added £23,000,000 to our indebtedness abroad, and if our theory is correct that borrowed money readies ns in the shape of imports of merchandise the figures for those years should show an excess of imports. Actually they do not do so. In fact, in the nine years the exports exceeded the imports by about £17,000,000 in the aggregate, but this excess was a very long way short of meeting' our interest charges on public and private indebtedness. We were borrowing heavily, and the borrowed money was reaching us chiefly in the shape of merchandise, which hears out our statement that if five or ten millions a year were being sent to New Zealand for investment H would be mostly in the shape of merchandise, that is onr imports would increase by that amount c.r thereabouts, and we should be the gainers. If, on the contrary, we were to. pay off our debts abroad it would have to he by means of a large excess of exports, and if we did this until all our debts were paid, and still continued to send away a great deal more than we received it necessarily follows that the country would be impoverished, unless wo were investing our surplus in other countries, and in that case we should soon have an excess of imports again, that is we should receive interest on onr foreign investments, as England does at,; present. That interest .would, however, reach us chiefly in the shape of merchandise.