STERLING FUNDS

Wairarapa Times-Age, 7 August 1940, Page 9

STERLING FUNDS

NEW ZEALAND’S POSITION. NOTE OF CAUTION SOUNDED BY BANKER. (By Telegraph—Press Association—Copyright) LONDON. July 12. A warning that the improvement in New Zealand's sterling funds might not persist after war was issued by Lord Balfour of Burleigh, when speaking as chairman at the annual meeting yesterday of the National Bank of New Zealand. The recent improvement of the funds to £23,000.000. he said, was not entirely due to the effectiveness of exchange control and the more orderly control of imports. "It is due largely to the war,” continued Lord Balfour. “Since the war began, the bulk of New Zealand’s exports have been sold by the New Zealand Government to the United Kingdom Government, and one of the consequences is that the Reserve Bank receives payment for much of the produce as soon as it is shipped, whereas before the war the Reserve Bank and trading banks received this payment cnly after perhaps two or three months. "The cheerful picture presented by the figures of New Zealand’s sterling balance cannot therefore be taken purely at its fact value. If New Zealand exporters revert after the war to the former methods of finance, there will be a time-lag of some months, during which little or no proceeds of exports will be received, and there will be a corresponding drain on the country's sterling balances.

“It is clear, therefore, that any demand at this stage for a relaxation of import restrictions would be premature. In saying this, I have in mindthe possibility that New Zealand’s post-war existence may not be easy. For. instance, a world that is being taught by rationing, by high prices, and even by propaganda, to eat margarine instead of butter, may take longer to discard this habit than will suit dairy-farmers.”