The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” THURSDAY, NOVEMBER 16, 1939. N.Z.’S ECONOMIC OUTLOOK

Gisborne Herald, Volume LXVI, Issue 20096, 16 November 1939, Page 4

The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” THURSDAY, NOVEMBER 16, 1939. N.Z.’S ECONOMIC OUTLOOK

The accumulation of reports regarding the difficulties being experienced by traders in the Dominion provides ground for serious disquiet as to what the future holds for the people. There are many stern facts which must be faced and which cannot be dismissed ■lightly by an array of academic theories. In the circumstances, those who see their businesses or their employment in jeopardy naturally look to the Government for a statement of policy and some reassurance, but all that has so far been forthcoming has tended to increase rather than allay anxiety. Continuing his radio serial this week, Mr. Nash admitted that some importers had been hard hit, but even while trying to hold out hope for an improvement he confessed that there would be further restrictions next year. This sort of contradiction was largely typical of his address and it is now becoming clear that not all lire Minister's plausibility can disguise from the public the seriousness of the situation. Mr. Nash claimed that ihe Government’s policy had resulted in the expansion of secondary industry, had given a greater proportion of trade to Britain, enabled New Zealand to meet her overseas commitments, and kept the people of the Dominion in employment. In addition, he contended that no matter what system had been devised it would have been impossible to pay for more imports. All these statements are deserving of careful analysis.

A general answer to the Minister is that never before has the Dominion been in such difficulty regarding the meeting of its overseas obligations and never when export prices have been high has secondary industry failed to expand or unemployment been an acute problem. In the past, these difficulties have always been associated with slump conditions, whereas the past three years have been the most prosperous in the history of the country. The people are entitled to ask why, since the Minister claimed ability to insulate the Dominion against world depressions, his policy lias caused such industrial disruption in a time of unparalleled prosperity. To say that no other system could have been devised is no explanation and, in any case, is not correct. Prior to the slump, under the orthodox system, industry expanded, debt payments were met, people were kept in employment, and there were no drastic restrictions of .imports. In other words, conditions then were normal, and when Mr. Nash says “the sooner we get back to something like normal the better it will be lor all concerned,’’ he is, unconsciously, no doubt, echoing the wish of the people and expressing a desire for the form of government to which this country has been accustomed in the past, and not the socialistic experiments that have proved so disastrous in the past few years.

Mr. Nash complains that the Dominion has imported £20,000,000 worth of goods more than it should have in the past two years, but only a few days earlier he had given the figure as £15,000,000 and the period as three years. On neither occasion, however, did he explain what, had led to this abnormal demand for imported goods. The cause of the problem was ttie policy of currency expansion advocated by Mr. Nash himself and as a result of which nearly £20,000,000 of additional “purchasing power” was created. The error of this procedure was recognised by the Minister when he declined to increase the guaranteed price because it would add to the purchasing power of a large section of the community and increase the de-

mand for imported goods. To the extent that there has been over-importa-tion, therefore, Mr. Nash’s own policy is to blame. Then he makes the disturbing statement that there is no

reason to expect, an increase in the value of exports next year. Since the major items of export are being sold to the British Government at a higher price, the inference is that Mr. Nash anticipates a further decline in production, for if production were maintained and higher prices secured there would be every reason to expect an Increase in the value of exports. Mr. Nash, however, leaves this paradox unexplained. The Minister claimed that import selection had resulted in a larger proportion of goods being obtained from Britain. The latest official figures, however, show that in the first eight months of this year, under import control, a smaller proportion of British goods had been imported. A few months ago the Government proposed to transfer 8000 men from public works to industry and Mr. Nash now talks of the expansion of secondary production. The official figures, however, show that there arc 8000 more on public works than two years ago and that the reduction in the last four months was only 7f>o. To offset this, it is shown also that while last year there were only 2154 registered unemployed, at the corresponding date this year 8066 were receiving unemployment benefits from the social security fund. There is one other point which Mr. Nash ignores and that is that the present position is in no small measure due to the terms under which he agreed to the repayment of London loans, and this, in turn, was made necessary because of the lack of confidence in his financial policy. Summed up, there is nothing in the least abnormal about the basic position of the Dominion and whatever difficulties are now being experienced are directly due to one aspect or another of the Government’s policy. What is needed is, as Mr. Nash says, to get back to something like normal, and this means a reversion to the system which made possible the century of progress which the Dominion, as a result of that system, is now able to celebrate.