THE H.B. TRIBUNE MONDAY, NOVEMBER 21, 1927 THE TRADE BALANCE

Hawke's Bay Tribune, Volume XVII, 21 November 1927, Page 4

THE H.B. TRIBUNE MONDAY, NOVEMBER 21, 1927 THE TRADE BALANCE

JN connection with the prospect of an at least appreciable, it may be substantial, increase in the aggregate value of the season’s wool clip, one of our main exports, it is also gratifying to note that there has been disclosed a very decided tendency towards shrinkage in the aggregate of our imports. On this point the latest official figures issued are, so far as they go, of a moderately reassuring nature. These show that for the month of October the landed value of our imports was within very little of threequarters of a miffion less than for the corresponding month of last year. The fact that, despite this, for that month the imports were nearly 1| million in excess of ports during the same period is not so alarming as, by itself, it looks. October is a big importing month, but it marks only the beginning of our export season, and there should, from now on to the end of the financial year, be a progressive improvement in the relation of export values to import. In any event, the excess of imports over exports for October is less than half what it was last year, the latter showing as well over 2| million, figures calculated to arouse the gravest apprehension as to whether we were driving before the winds of extravagance.

A single month is, however, no very reliable guide as to the general trend of affairs, but, taking (he ten complete months of the calendar year that have expired, they also give us some hope that things are righting themselves. For these, months last year our import figures were just on 41J millio' ' ‘’gainst ex

ports set down at a very little more than 39 million. For that period we were thus to the bad by nearly million. For the same ten months of this year the position has been reversed to the extent of very nearly 3 million, the exports standing at million and the imports at 375. Thus a comparison of the two periods shows an improvement of somewhere aobut 53 million, It must be understood, however, that these figures show only a very scant recovery of the drift to leeward that has occurred since the end of 1925, for the excess of imports over exports for the whole of 1926 was a good deal over 4| million, so that there is still a good deal more than 1$ million of that deficit to wipe off before we can say anything of a favourable balance for the current year.

When quoting gross import and export figures it may be always worth while reminding readers, even by way of repetition, that they may afford only a very crude idea of their real significance. It is only by some detailed enquiry into the character of the imports that we can gather their true economic meaning. To the extent that they represent more or less permanent additions to our productive capacity, such as machinery, plant, and the like, they are not to be counted—or at any rate not to full cost —as necessary debits in the annual balance of trade. They are, in fact, capital investments that add to the national wealth of a productive nature, and are subject merely to yearly allowances for depreciations. It is very much to be feared, however, that any such analysis as suggested would disclose but a very small proportion of the whole volume and value of our imports that are real additions to our productive wealth. In the main, and probably very much in the main, our adverse trade balances are due to the importation of things we could well do without.

Finally, and again by way of a repeated reminder, it has always to be kept in view that, besides paying for our imports, we have to provide for the payment of some five or six millions every year in the -way of interest upon our outside public debt. Nor is it to be forgotten that the same has to be said with regard to private borrowings from abroad, as to which no data are available, but which probably amounts to a very substantia] total. It will thus be seen that if we cannot, on the average, year in and year out, show a trade balance of somewhere about six or seven millions in favour of our exports, then we are going to the bad and living on borrowed capital, instead of building up new for the development of our resources and the expansion of our labour absorbing industries. We have already loud complaints with regard to the numbers of our unemployed, but these must necessarily grow louder unless there is some reasoned and reasonable regard paid to the restriction of our spending abroad to the limits of our surplus income after we have paid interest on our external borrowings.