“STOP ALL WASTE”

Dominion, Volume 14, Issue 266, 4 August 1921, Page 6

“STOP ALL WASTE”

ECONOMIC CONDITIONS TO-DAY THE ROAD TO STABILITY ADDRESS TO CHAMBER OF COMMERCE i The present economic situation and possible means of improving it were discussed by the president of the Wellington Chamber of Commerce (Mr. M. A. Carr) in his address to the annual meeting of the' chamber yesterday. "For many years past,” said Mr. Carr, "our exports have shown a considerable excess over imports, but for the last trading year the potation has been entirely reversed; the imports hare exceeded the exports in value by more than -£19,000,000. The difficulties of finance following the depressed state of our export trade were accentuated by very ■heavy importations of goods into the Dominion in the second half of 1920, and the early months of 1921. Traders are experiencing a salutary lesson, in connection with over importing. -Approximately two years’ imports in value have been received in one trading year. Importers are holding heavy stocks of highpriced goods, and have to face a falling market. "It is nfft difficult to trace the reason for the heavy importations. During the previous four or five years importers had the utmost difficulty in obtaining fulfilment of their requirements from overseas. They wore practically compelled to place orders much in excess of their normal requirements in the realisation that portion only of their orders would be fulfilled. In 1920, howeve., owing to the decreased demand in Home markets and to the failure of some export .markets, the position suddenly altered, and shippers in the Old Country and in tho United States of America welcomed the opportunity of fulfilling the whole of their orders from the Dominions. Tho very fact that ultimately it became difficult far the Australasian banks readily to provide financial facilities ■ in London for the negotiation of documentary bills on New Zealand no doubt tended to' restrict imports, and this in itself was probably a 'blessing in disguise.’ The natural result of very heavy importations and depression in our export market has been financial stringency in New Zealand. Rates of Exchange. "The question that is foremost in oui mind’s is when is tho position likely to right itself? Before it is’ possible to form an opinion upon this question it is necessary to examine the economic condition of the principal countries of the world. If there is one thing more than another that has been brought home to the commercial community it is the interdependence of nations upon each other. If for any reason the capacity for production and consumption of any nation, or any group of nations, is seriously impaired that position is inevitably reflected in tho trade of other nations. Until the distressed countries of Europe are placed in a better position financially, and show signs of recovery from their 'economic paralysis,’ it would appear that any revival of world’s trade must be slow indeed. Before the war it was estimated that 40 per cent, of Britain's export trade was with the Continent of Europe. Consider the position of Europe to-day. Many of the countries have seriously depreciated currencies, and their industrial condition is deplorable. In a report which came to my notice recently figures were given showing tho difficulty of Britain doing business with tho Continent of Europe , in view of the high rates of exchange which the foreign importer has to pay for .£1 sterling. For goods imported from Great Britain the French customer has to pay for -£1 sterling the equivalent of £2 3s. 2d. in francs, the Italian customer the equivalent of £4 3s. 7d. in lire, tlia Belgian customer the equivalent of £2 Is. in francs, the German customer the equivalent of -fill 13s. 4d. in marks, and tlie Austrian customer the equivalent of £72 18s. 4d. in kronen. Credit Schemes. "Various credit schemes have been promulgated to assist in the restoration of trade between the different countries in the direction of enabling traders to obtain credits to finance necessary imports. The principal cf these are tho Ter Meulon credit scheme (so named after an Amsterdam banker), ’ and the Mountain scheme. Tho Ter Meulen scheme proposes to provide a special form of security so that an exporter may be sure of payment when supplying merchandise to an impoverished country on credit. It proposes that an international commission bo created to administer certain assets which the Governments are to pledge, with a view to obtaining imports on credit for themselves or for their nationals. The Governments would issue bonds which would be countersigned by the International Commission, and these bonds would be used to reinforce the credit of importers. As an exporter acquiring these bonds might wish to borrow on them, it was proposed that a syndicate be formed of Government, insurance companies, and bankers to guarantee them. The difficulties. however, facing these proposals are not so much economic ns political as many of the States of Europe are still in an unsettled condition. "The country which will he first in experiencing a revival in industry and commerce will be tho one which can reduce its cost of production to the point which will enable it to offer its goods at prices the world can afford to pay. To mv mind, it is useless to think that prices can come back to pre-war level. It is doubtful if in all the circumstances Buch an event is either possible or desirable. The fall in prices must be gradual, and this will be possiblo by a reduction in profits, a reduction in wages, and such increased efficiency and production as will greatly lessen costs; and if this can be effected it will still leave a fair reward for labour and a fair return on capital. Public and Private Economy. "Economists and financiers tho world over are urging the imperative necessity of curtailment and reduction in_ national expenditure. The lead was given at tho Brussels International Financial Conference, the recommendations of which were published early in the year. The conference urged that every Government should restrict its ordinary recurrent expenditure to such an amount as could be covered by its ordinary revenue. abandon all unproductive extraordinary expenditure, and restrict even productive extraordinary expenditure to tho lowest possible amount. You are all familiar with the economy campaign which,is taking place in tho Old Land. Bome weeks ago at ono of tho meetings of the council of the chamber I took tho opportunity of raising the question of public expenditure, and the need of economy in New Zealand. "I quote you from a report recently published by a committee set up by the Sydney Chamber of Commerce: — Every nerve should be strained publicly and privately to economise. We have now to learn to bo guided solely by what we can afford in all our expenditures. Wo must rigorously cut out all waste unless we are to be brought to a financial standstill. Tho policy of tho “back to the land” and "increase our exports” can and will bo our salvation if promptly and vigorously carried out; and this can only be effectively impressed upon tho people by our Governments, which should bo tho first, not the last, te point the road to economy in our administration.

The simple fact is we cannot afford to continue in tho present track — and a little study of our statistics proves this up to tho hilt. As a test of their capacity those in charge of Government Departments should first be called upon to set out clearly what savings they suggest can be made—after which their ideas should be submitted to a board of specially selected business men for their consideration. If tho suggestions are considered inadequate then it should lie with that board to go fully into matters into whatever, may bo thought best, te ascertain what can be done in the way of eliminating ■ needless red tape,' and thereby reduce the cost and complications for tho public iu their transactions with the Government Departments. Time is money for all of us, but this is too often forgotten by those in authority. "I believe that all thinking people in New Zealand will admit that tho statements of the Sydney committee apply as well to New Zealand as they do to New South Wales and other countries in the British Empire. "Consider the tremendous growth of revenue and expenditure in New Zealand under the Consolidated Fund in recent years. For the year ending March 31. 1914, the revenue was £12,229,661. tho expenditure .£11,825,864. In 1921 the revenue was 2234,192,986, the expenditure £28,068,723. The land tax has grown from £767,451 in 1914 to 261,688,978 in 1921, and income tax from ,£554.271 te £8,248,944. Curtail Non-Paying Services. "Now I quite realise that it was inevitable that, in the circumstances that have obtained during that seven-yearly period, the increases must be enormous, but the point I want to stress is is it possible for this country to continue its expenditure on the same scale? To my mind it is imperative that Government and local bodies take up the matter of limiting expenditure in a systematic way. Services which are not paying should be reduced to the minimum. If, for example, there be railway services in thia country which can only be run at a loss, drastic action should be taken to curtail those services. It may be inconvenient to the public, but inconveniences will have to be endured if New Zealand is to weather the. storm successfully. Take another proposed expenditure of capital money which at present looms bo largely in the public eve—the installation and development of hydro-electric schemes. To my mind, it will be a financial impossibility for this country, during the next few years, to develop even half of the schemes which are proposed, and it would be infinitely better in the public welfare that onlv those schemes be proceeded with the financial success of which is assured. "It would be futile for the commercial community to urge the necessity for national economy unless its members themselves exercised economy in their own undertakings. Sheer necessity has compelled most mercantile houses to effect economies. We must stop waste or waste will stop us.”