FLIGHT OF CAPITAL

Evening Post, Volume CXXVI, Issue 138, 8 December 1938, Page 20

FLIGHT OF CAPITAL

AN ECONOMIST'S WARNING

(From "The Post's" Representative.)

SYDNEY, December 2,

Professor T. Hytten, economic adviser to the Bank of New South Wales, returned to Sydney recently after a visit to New Zealand. He had some interesting things to say about the drop in New Zealand funds in London.

"New Zealand's sterling balances have been dropping at the rate of nearly £1,000,000 a week, and they are rapidly r reaching a dangerously low level," fie said. "It should be possible to make the funds hold out until Christmas. Heavier export returns in the first few months of the new year should bring at least temporary relief, although the measure of that reliei will depend on the general trading position. The fall in sterling fund? was partly arrested last week, when it was only £600,000. That may mean that the flight of capital to London and Australia is being stopped a little. But, apart from the drop in sterling funds, both production and export prices are falling.

"The Government is spending a good deal to keep up employment, but that expenditure is of a kind that cannot repay its costs for a considerable time," said Professor Hytten. "It is neither increasing exports nor reducing imports. Public works must be slowed down to divert resources to private employment. The Government is aware of that, and one hopes that it will take measures to remedy the position. By encouraging private employment that will be immediately productive it can deal with a situation that may become critical fairly soon."