SAVING OF DOLLARS

Waikato Independent, Volume XLIV, Issue 6105, 22 September 1947, Page 7

SAVING OF DOLLARS

HOW NEW ZEALAND CAN HELP BRITAIN SURVEY OF IMPORTS FROM DOLLAR AREAS The aid to Britain conference convened recently by the Government to study the British Government's suggestions as to how New Zealand can help Britain to meet the dollar crisis has recommended among other things cuts in certain imports from the dollar areas. The following article, by H. R. Rodwell, in the Weekly News, surveys New Zealand's trade with these areas and the extent of possible savings. The seriousness of the dollar crisis with which Great Britain is faced is now generally realised, and there is widespread approval of the New Zealand Government's action in asking the United Kingdom Government for suggestions as to how this "country can help. In response to this approach the United Kingdom Government has suggested that we should purchase imports from dollar areas only up to the value of our current dollar income earned by ouri exports to these areas. This would avoid the need to purchase dollars in London and thus ease the strain on the United Kingdom's dollar resources.

New Zealand has long had an import surplus from the dollar areas, more particularly the United States. Before the war the import surplus varied from year to year, but was of the order of £NZ4OO,OOO to £NZ5,000,000.: But for the eleven months ended November 1946 this import surplus was down to £NZ1,519,000. Consequently, to bring our imports within current dollar income, we must narrow the gap between imports and exports by approximately £NZ1,500,000 on last year's figures. There are three ways of doing this (apart from borrowing from the United States) —either we can expand exports to the dollar areas, or we can reduce imports from those areas, or both. Exports to America. The United States is to-day buying a larger share of our exports than she did before the war. In 1939 she took about five per cent; last year she

took ten per cent, an increase due mainly to larger sales of wool. Larger sales may still Be possible in the future in view of the likely modification of the United States wool tariff, but such expansion might reduce supplies of wool to the United Kingdom and thus prejudice her export trade expansion which is vital to her economic future. Nor does there seem any likelihood that the volume of our other main exports to dollar areas—hides, skins, and sausage casings—can expand very much in the near future.

It would seem, indeed, that the only practicable way of eliminating our import surplus from the dollar areas is by reducing—temporarily—our imports from them. In attempting to do this we should reserve the dollars which our exports earn for us to buy imports from the dollar 'areas which are essential to us and which cannot be obtained from within the steiling area. A brief survey of our imports from dollar areas will indicate that the general nature of the change that will be necessary to enable us to live within our dollar income.

New Zealand Imports In 1946 the largest single item imported from the dollar area was tobacco, valued at approximately £NZ--1,500,000. A reduction in this item c-ould be made without serious injury to New Zealand's economy, though many people would ho, doubt find it inconvenient. In 1946 we imported over £NZBSO,OOQ worth of motor spirit from the dollar area (United States and Peru), and nearly £NZ7OO,OOO worth from Iran and Bahrein Island. Imports from the two latter areas do not involve any expenditure of dollars, and transfer of our buying to these sources of supply would therefore be desirable so long as this did not cut into the United Kingdom's supplies. Motor spirit might also be obtained from the Dutch East Indies and from Russia.

Though some change in the distribution of our import trade in motor spirit may be possible, yet it seems likely that our total import will have to be reduced. By adopting both these methods it should be possible to reduce our dollar expenditure on petrol by as much as £NZ4OO.OOO without reducing consumption very much. It would be much more difficult for us to do without any of out imports of lubricating oil from the dollar areas. In 1946 practically all came from the United States, and alternative sources of supply are not readily available. The same is true of fuel oil, the bulk of which in 1946 came from Curacao, the United States and Peru. Some additional supplies might be obtained from Iran and Bahrein Island, and also from Russia, but it would not be easy to save dollars on this item.

Some £NZ6OO,OOO worth of United States tractors were imported last year. Reductions in total imports and transfers of buying to the United Kingdom and Australia could reduce dollar expenditure. Since the war we have been importing considerable quantities of iron and steel (sheet and plate!) from the United States. In 1946 one-third of our imports came from this source, and were valued at about £NZSOO,OOO. We might obtain increased quantities from the United Kingdom and Australia, but any large reduction in total imports should be avoided, if possible. The United States also supplies us with considerable quantities of agricultural implements and machinery (45 per cent of total imports), artificers' tools (30 per cent), wireless apparatus (50 per cent), while of recent years imports of fertilisers have been large, in 1946 being valued at £NZ4OO,OOO (30 per cent of total imports of this commodity. •

Except in the case of wireless apparatus, reductions in these imports would prove serious, but some additional supplies might be obtained from the United Kingdom and Australia, while increased supplies of fertiliser will shortly be available from Nauru Island. Imports of wireless apparatus (valued at £NZIOO,000 from the United States in 1946) could be drastically reduced. Wireless sets do not wear out quickly, and therefore renewals could be postponed without undue hardship. We have also been buying from the United States small quantities of a wide range of commodities, including apparel, drapery, cotton and silk piece goods, yarns, floor coverings, glass, etc., valued in all at some £NZSOO,000. A large proportion of these could be obtained within the sterling area, while reductions in them would not seriously prejudice our standards of living.

New Zealand also imports from the dollar areas considerable quantities of books and paper. Although some saving is to be made on these items, one would hesitate to recommend a drastic cut in view of the importance in times such as these of the widest possible spread of information about conditions in overseas countries and how these will re-act upon our own internal situation.