WELLINGTON NEWS

Hokitika Guardian, 13 August 1926, Page 4

WELLINGTON NEWS

THE DOMINION’S TRADE. (Special to “ Guardian.”) WELLINGTON, August 11. New Zealand’s export and import trade for the twelve months to June ,'iOt'h show that the exports, totalled £-10,360,317, and the imports to £62,167,30*2, so that there was an exeess.of imports amounting to £5,820,465. This is what the economists C'ifll an adverse trade balance for we have bought morn than we have sold, and the excess has had to he paid for by obtaining* credit from the banks. New Zealand being a borrowing country with a heavy foreign debt on which interest has to be paid, it is imperative. that our exports should exceed our imports by at least £6,000,000. The total of the interest and sinking fund that we have, to .pay in TSritain exceeds six millions and that has to be paid out of the exports. Last year, that is to June 30, we were not able to pay for the whole of our imports, let alone the interest obligation, and the whole amount-, a bout £11.000,000, has been-met by borrowing. That sum was actually borrowed by the Government during the period. Tt is a very unhealthy position and it is not a matter for wonder that business in the Dominion is dull. The amount borrowed must he repaid, especially the advances obtained from the banks, and therefore the wholesale bouses and other direct importers must institute economies. There must be a reduction of imports and that reduction lias already begun, for the imports for the last three months of the year, that is April, May and June, show a decline of £868,154 as compared wit'll the corresponding three months of last year. The decline in imports while obviously the correct economic move at the moment, will have some unpleasant effects. With less goods to sell there will he a contraction in the turnover and that will force many retailers to reduce overhead expenses, and this may he accomplished by shortening staff's. Hut reduction in imports is not all that is necessary to restore sound economic conditions. . There must be a general abandonment of extravagance, and both the Government and the local authorities must he compelled by the force of public opinion to reduce the costs of administration. The Government lias not yet made any serious effort at economy but it must be compelled to do so. If we arc to 'have a sound, healthy trade position . and sound finance everyone in the country must help. The times and conditions call for co-operative efforts.

THE PRICE LEVEL. There is of course still a big difference between the prices ruling for our primary products now. and those ruling prior to the war. Many people are of tile opinion that values cannot recode to the pre-war level, and they base their opinion on the fact that presentday costs of production are so much higher, and that current prices are now very near to production costs. There, is a continual struggle between producers and consumers' on the price problem.; the producer seeks to obtain a margin above cost .which represents bis profit, while the consumer must restrict his purchase:; according to his means. When the purchasing capacity of the consumer is good prices are firm and the producer makes a fair, and sometimes more than fair, profit. We have now to recognise the fact that the purchasing powers of the ijonsuni- ■ ers of our primary produces are conj tract iijg"so the prices are falling, and 'we. are steadily moving towards the pre-war price level. In the Monthly Abstract of Statistics for . .July the Government Statistician has furnished a very interesting table Which shows the recorded values of these sixteen items for the year elided June 30, 1926, were £42,399,969, and had the same sixteen products sold at the prices ruling in 1913-14 the aggregate value wold have been £23,296,329, A similar .comparison of the previous year’s figures, shows that the recorded value was £63,594,635, and ait the pre-war prices the realisation would have been £30,340,536, there was thus a gain that year of £23,254,099. The gain in 1025-26 was only £14.103,640. so that in the past year wo were about £9,000,000 nearer the post-war level. -In some eases the difference between the recorded value and the pre-war value was very small, as for instance frozen beef, the difference in which was only £14.023. There is little danger of the pre-war level being reached just yet but there is no doubt that values are tending in that direction. Hides are actually lower than the pre-war period. The hides exported in 1925-20 were valued at £583,911, hut Iliad they sold at the pre-war prices they would have realised £670.965, or £87.054 more. The cost of production will not prevent prices falling.