NOT THE WAY TO NATIONAL SECURITY.

Timaru Herald, Volume CXLV, Issue 21178, 27 October 1938, Page 6

NOT THE WAY TO NATIONAL SECURITY.

It is no exaggeration to say that the frankly expressed fears about the future in New Zealand that were conveyed to the Auditor-General of New South Wales during his tour of the Dominion by thirty to forty commercial men in the Dominion are shared in a more or less confined fashion by commercial interests generally throughout the Dominion. It is true that a large section of the community has convinced itself that the Government has solved New Zealand’s financial and economic problems thus giving the country an assured future. It is also true that ominous clouds are boiling up on the horizon that ought not to be overlooked by the Government and people of the Dominion. For instance, the rapid shrinkage of the country’s sterling exchange in London has gone on unchecked as the following table shows: Last Monday Reserve Bank Trading Banks in Sept. Sterling Assets. (N.Z.£) (£N.Z.) 1934 24,501,000 15,766,000 1935 19,689,000 14,690,000 1936 16,836,000 17,193,000 1937 19,066,000 10,918,000 1938 9,118,000 6,196,000 The explanation is not far to seek. New Zealand’s production (in terms of the proceeds of sale) is not keeping pace with the rate of expenditure. In otlqy words the Dominion is again beginning to live beyond its means. Hence an unsatisfactory situation is created; in other words, as the Dominion’s imports increase rapidly mouth by month, the London funds shrink; and the Dominion becomes confronted with sterling exchange in London that is insufficient to meet New Zealand’s obligations: Exports Imports. Favourable Balance 1936 £ £ £ 53,659,000 39,459,000 14,200,000 1937 64,621,000 50,076,000 14,545,000 1938 61,920,000 57,543,000 4,377,000 If these figures speak for themselves, revealing as they do that the year 1938 was one of New Zealand’s worst trade years since 1931, the steady unfavourable trend of New Zealand’s trading operations in the first two months of this producing year is anything but encouraging: July 193& Exports. Imports Adverse Balance. £ £ £ 3,738,000 4,611,000 828,000 August 1938 £ £ £ 3,823,000 5,063,000 1,240,000 It may be held in some quarters that New Zealand is not affected by overseas market conditions, nor is the Dominion concerned because the trade balance is adverse, but more cautious New Zealanders among all sections of the community, because they have not overlooked the plans laid by the Government for financing a most expensive social security plan on increased production, are satisfied that adverse trade balances bringing us they do a shrinkage in the country’s sterling exchange in London, are scarcely the way to build social and economic security in New Zealand.