WELLINGTON NEWS

Hokitika Guardian, 10 July 1926, Page 1

WELLINGTON NEWS

TRADE OF NEW ZEALAND. (Special to “ Guardian.”) WELLINGTON, July 7. With the issue of the June number of the Afontlily Abstract of Statistics tlie trade returns—exports and imports for the month of May and for tlie five months to the end of May are available. Taking the twelve months ended May 31st last, me exports were valued at £45,764,578, and the imports at £52,236,015, and this shows that tlie imports in the periods exceeded the exports by £6,471,437, in other words we bought more goods abroad than wo sold, and thus we overran tlie constable by the amount stated. It must be obvious to everyone that we pay for our imports out of our exports, that is goods for goods, that is how all international trade is squared, gold being used only occasionally and when convenient. We arc a debtor country and the Government' alone has to pay over mx millions in interest annually to the foreign money lender, mainly located ill Britain and Australia. Because of this it is not sufficient that our exports should pay for our imports, but iliere .should also be a margin over to meet the interest due to foreigners.

In the twelve months under review we failed to meet the cost of our imports let alone the interest charge. W r e were really over-twelve million pounds to the had. Still the debt has been paid and those entitled to receive interest and those entitled to be paid for goods sold to New Zealand merchants have been paid. How was it done? Simply by borrowing. The Government has thus been able to pay interest out of loan moneys. The traders have borrowed from the banks to pay for imports and this will be shown in the quarterly hank averages due shortly. By thus overdoing imports we have created an ugly situation for ourselves. lienee the cry of the unemployed arid the complaints of dulness of trade. The amount borrowed from the banks to nay for imports must be repaid, and that can only be done by very strict economy, and by cutting down future imports very drastically. It may be asked how does it come about that imports arc so much in Excess. The- answer is that the importers have failed to take cognisance of the trend of exports; the fall in prices was viewed as a temporary affair, and they kept on importing at the old rate, regardless of the fact that every drop in export values means lessened purchasing power. During the five months of this year to May 31st tlie exports were valued at £25,499,943, as com-

pared with £34,997,637 in the corresponding five months of last year showing a drop of 69,497,694, that is to say the income of Hie country or the purchasing power of the people was reduced by that amount, yet the imports did not show much reduction. The imports, for the five months were valued at £20,999,905. as against £21,220,297. a decrease of only £20,392 and that was due to the contractions in April and May. Looking over the items of export for the five months it it to be noted that fifteen items comprising our principal primary products declined £7,895,325, as compared with the same period of last year, and of tiiis amount wool accounted for £5,729,720 or considerably more than half the total. The drop in frozen lamb for tlie period was £916,939, in frozen mutton *.595,789, in frozen beef £313,728, in sheep skins £576,153, in hides £lO7, 482, in flutter £1,340,880, and in cheese £86.065, the other items showing smaller shrinkages. The contraction in blitter is partly due to the new policy of holding supplies in cold store.

Why have prices fallen, and will there be a recovery? The decline in commodity prices is due to the res torat ion of the gold standard, which in itself meant the end. 1 of inflation. On April 28, 1925, the sovereign was declared and was actually worth 295, that is to sav its purchasing power was equal to 20s. On May 15 this year the pound sterling reached gold parity the first time for eleven years, and it will he kept there. The purchasing power of the pound sterling was as low as 14s, it rose steadily since 1919. and is now on a parity with gold. The Britisher wants 20s for his pound sterling whether it is in butter, cheese, frozen meat, hides, skins, tallow, wool, apples or what not, and it is of no use expecting him to take 15s or 16s worth of stuff to the £. Sterling is hack to tho 1911 level, and commodities must got hack to that price level. It seems therefore that produce prices must continue to fall until a level is'reached at which business can he done on a sound economic basis. Control Boards are a vain hope, if it is expected that they can control prices and maintain the present level of values. Profit in producing lies in revalue ting land at its economic value ami reducing the cost of production.