NEW ZEALAND’S PROBLEM AT HOME.

Timaru Herald, Volume CXLVI, Issue 21360, 1 June 1939, Page 8

NEW ZEALAND’S PROBLEM AT HOME.

Although ridicule has been poured on the suggestion that the visit to London of the New Zealand Minister of Finance is of the highest significance, it is already clear that the threefold task Mr Nash has undertaken is of special importance. The City of London knows from experience that New Zealand will never default; on the contrary, the Dominion has for long years been held in the highest esteem in the Homeland. The City of London knows, however, that New Zealand can meet its debt obligations in London from two financial sources; namely from accumulated sterling exchange held in London, or borrowing. Too much has already been said in castigation of the procedure followed by former Governments in handling maturing loans. If there are no funds in London it is obvious that the New Zealand Government will be compelled to borrow to meet maturing loans. This aspect of the problem of Dominion finance has not been overlooked by the New Zealand Minister of Fnance, who has embarked upon a policy designed to create a sterling exchange poll in the Homeland, cither by the drastic control of imports or a substantial expansion of AngloNew Zealand trade: Whatever the Government had done internally, said Mr Nash, did not concern the City as long as it did not affect the willingness or the capacity to meet the interest charges. Mr Nash added that he was prepared to offer the British Government an agreement under which, after meeting the debt and other charges, New Zealand would spend the maximum balances available in Britain, which would be proportionately more of New Zealand’s overseas trade than heretofore.

It will be seen that New Zealand’s obligations in face of maturing loans will be considerably increased, because of the fall in New Zealand’s exports resulting in a shrinkage in the balance of exports over imports. This presents a most difficult problem, in view of the influential demands being made upon New Zealand to modify the control of imports. If increases can be inajle in the volume and value of New Zealand’s exportable products Air Nash’s task will be lightened, but in face of falling production in this country together with lower juice levels, an awkward position for Air Nash to face may be created unless the New Zealand Government is prepared to abandon its objections to borrowing. In the course of an editorial comment on New Zealand’s economic outlook 77ie Daily Teleyraph says: “British exporters shoulcj ask for substantial concessions from Mr Nash, as New Zealand’s financial straits are due to her own policy, but if Mr Nash promises ability to meet her debt charges she will not be jeoparoised, and he may be assured of accommodation.” There has never been any question of New Zealand defaulting. That, of course, is unthinkable. What is needed, however, in face of the difficult position in New Zealand, is mutual consideration; indeed, the utmost frankness should be displayed on both sides in all negotiations associated with Mr Nash’s most important visit to the Homeland to face a threefold task involving the problems of defence, trade and finance.