Mr. Nash Speaks On Devaluation

Chronicle (Levin), 21 September 1949, Page 6

Mr. Nash Speaks On Devaluation

WELLINGTON, September 20. New Zealand's standard of living should not be directly affected by devaluation, said the Finance Minister, Mr. Nash, in the House of Representatives today. About 12 per cent of New Zealand's imports were drawn from dollar sources but they were largely capital goods not obtainable elsewhere. There might ultimately be &ome change in the price of sterling area goods which included raw materiais of dollar origin, but it was too early yefc to assess those effects accurately. "The o.verall effect on oiir economy may not be as heavy as has been calculated but that is not to say that a steep rise in the price of some goods from the dollar area, may not eause concern, 1 bfi arlrled. ■ « - '

Mr. Nasli. said lieences had already Ueon issuoU biiis ^ e«xi" io tnc vaiue oi «xw,Ooo,ooS' 4,or imporfcs xrom the uniieci otates and oaiiaUa and aboub A,xd,Uuo,ouu as expeoLou to come to oiiurge. xnciuueu m inat iigure was £6,000, U0U worLU ox capxtal goous not uOtainauie xrom the U.d.A. and sterliiijg area. 'l'ne remamuer oi tne licences fco tne vaiue oi iil,doU,U00 were for consumer goouo OuLaiuaoic oniy irom tno uoiiar aica. it mciuded such ltems as: isewspiiiit £-,0oo,uou, oil iiipou,oUd, touacv.u and cimuer (vaiue noi, oiated uy. ^>ir. i>asn; and otner goou:, oi. just over £-±,00u,uuU. x\ir. ivasn said it was thought tha. ^ix,uou,uou iitiii Ueen icniitteu uuiiiig Uoxore uovaiuation oocurred, iu • -rudiiig jjiuoauiy £^,uOo,oOO on uc^OUn. oi ib-tj inijjon.s ^ana po^siuly moiudin^ooine paj meuts ugumoi iyoo lieencesy. xi iiuu. ooen rtiauicd in tiine to oenen. uy lorwaru pau. -xuiiu x\xr. x\ asn sai.u aiiw Zealand's tota. douar pajinonis yoariy, liiciuding liii pons uiviuends and services, wero aGout /a,oUo,Ooo douars. This woun.' now.eosL aoout s,ho,'/D0,U0u or aDou. £6,U00,i;UU niore thau previousxy 11 m, aiiovvaiice wero made xor otner factor.. wiucn lmgnt enter into the pieture. Kew ivaiand s • doilar oariungs were abont 3U,Uud,0UU dollars yearly. uevaiuauion nOUiU losscn tnu uouar vaiue Oi our exports tiut snouid stimulate pureiiascs Ol our prouucts by tne tloiiai area. There should also be a rodue liou in blacicmarivet doilar transactioii. iu N'ew /.ealand goods but it was inipossiuie to say yct what the overali encet 011 our uoiiar mcome would be. xiiaoKmaxKet uperations. Mr. Nash said that uuring the lirsi six montns ox xbTU, skins to the vaiue ox 3hx,UUd dollars, all of N'ew Zealahd origin but noiie ne thought exporteu uuoctiy irom a e w Zealand, were imported into Ihe Q.B.A. This was the rosult oi operanons of blackmaricetero who, buying steruug at a cheap rate ot say niu eeuts mstead of 403 cents, liad oougnt xsew Zealand skins, sold n;em to tne dollar area probably at an imtial ioss, uut had recouped theinselves by buying dollar goous which w ere resoid ior a linal proiit in the sierliiig area. Mi;. Nordmeyer:' The skin ganie. Mr. Nash said the skin ganie ought to end now. Many dollars had beon iost to tliQ sterlmg area in this way but iii iuture it should be diflicult to obtain sterlmg at any substantial dis count aud the result should be to return iniilious more dollars to sterling and eliminate operations in cheap sterling. liad this decisive action not been taken tliings would have gone from bad to worse involving the L'nited Lvingdom in denation and all its consequenees. Opposition voice: They are not out of the wood yet. Mr. Nash": No oue is out of the wood yet. But our prosperity is linlced with that of the United lvingdom and the Uovernment proposes to help the United lvingdom to the limit in its present dilficulties. America Helpful. Mr. Nash said tlie decisions of the Washington conference gave great eause for hope. It miglit have been feared by some that the U.S.A., in face of sterling devaluation, would retaliate against sterling goods with higher tariffs or by prohibiting imports of British goods but there were pledges against high U.B.A. tarilfs and power

to reduce existing ones. Britain had^ been freed from the nondiscriminatory elauses of the earlier loan agreoinent and in other ways was being assisted to strengthen her position. Keviewing other Washington decisions and their likely effects, Mr. Nash said there would still be the need fOf some restriction .on the use of petrol. "This decision announced yesterday, was the most profouud in the history of exchange," said the Minister. 11 looked as if many other countries were following suit but there would be oue or two exceptions and the full position would not be known for.a little while. In his review of circumstances leading to the latest phase of the dollar crisis and steps taken at the London and Washington tallcs and in other ways to overcome the crucial doilar shortage, Mr. Nash referred briefly to, doilar loans now being considered^ by riouth Africa, Australia and New Zea land. "Such loans," he said, "migh.. be raised through tlie Export and 1m port Bank or through the Bank for . internatiqnal Settlements but New Zea land could not resort to the latter ax she was not a member of the International Monetary Fund. " Mr. Nash predieted that devaluation. together with other stcps which had been taken, should go far to restore a proper balance of trade between the dollar and sterling areas.