WELLINGTON NEWS

Hokitika Guardian, 23 April 1930, Page 2

WELLINGTON NEWS

TRADE OF THE DOMINION

(Special Correspondent.)

WELLINGTON, April 19

The trade figures of New Zealand for the year ended March 31 reflect the drastic fall in commodity prices that has taken place in the past six months. A year ago the exports exceeded the imports by the substantial sum of £12,048,478 which was more than sufficient to discharge our overseas obligations and then to leave a surplus. The returns for the year ended March 31 last shows the exports at £49,045,817 and the imports •art £49,167,914, thus disclosing an excess of imports of £122,097. The exports last year totalled £52,154,348 or £3,108,526 more than the total lor the year just ended.

It is a very sharp decline and entirely unexpected. The drop in commodity prices is world wide and as yet economists have not been able to assign the real cause of the decline, jbut There appears jto ibe a strong opinion that it is not due to monetary factors, but to some other short term factor which some declare to be want of confidence due to the collapse of the New York Stock Exchange boom and it is very probable that this is the main source of the trouble.- This want of confidence cannot be expected to be permanent and when it is restored trade and commerce will revive and letter prices rule for commodities, But it will be absolutely futile to expect produce prices to go back to the level of a year ago for confidence is one thing and puchasing power another. There must be an increase in the latter if pricse are to advance materially. Still with the return of confidence there will be more enterprise and that will help to develop, spending power. Wool and dairy produce may, and will probably realise better prices than are now current, nevertheless the need of reducing costs of production remains. This feature of the economic position has not received the earnest consideration of the authorities that it deserves and must get'. With an income of over eight million pounds less than a year ago we cannot maintain heavy expenditure on goods and services. The imports for the year ended March 31 last at £49,167,914 show an increase of £4,062,049 over the previous year and the expansion is by no means abnormal in view of the fact that in 1919 the balance of trade was so much in our favour. Importers were justified in believing that with the increased incomes and therefore increasd purchasing power the demands for the community would call for more goods and they acted accordingly. Where it not for the drastic fall in produce prices the imports would have been regarded as quite normal. The balance of visible imports and exports for the year to March 31 last shows an excess of imports of ■ £122,097 which is not very formidable and will be obliterated in the next three or four months for the high exchange on imports indeed has already done so.

The increase in imports has been mainly in luxury goods and there is evidence that these are being curtailed. In the two months of January and February of this 2268 fewer motor vehicles were imported than in the corresponding period of 1929, the figures'being 3051 against 5319, There will necessarily follow reductions in other lines either in quantity or in aggregate value due to price reductions and this has already occurred in respect to tobacco and cigarettes. But a mere reduction of imports will jnot entirely .relieve the position; there must be a curtailment of domestic expenditure on luxuries and wnte and extravagance .'must be eliminated.

The luxury trades are beginning to feel the pinch. It is rumoured that quite thirty picture houses have been closed, in various rural districts of the Dominion and a great many Olliers art not yielding the returns anticipated The position is said to be much more severe in Aus I ralia and the American magnets are much concerned. There is no doubt that imports will be greatly reduced during the next six months for that is inevitable.

The results are likely to be serious. With less goods to sell the turnover will be less and with a smaller turnover working staffs will have to bo reduced. This is going on in Aus-

tralia and will be the experience of New Zealand. Another aspect of contracting imports is that overseas shipping will be affected. Already we have the fact that the Mahia belonging to the Shaw Savill Coy are coming out- in ballast. If this foature continues the shipping will pro bably be forced to raise the freight rates. The economic conditions oi New Zealand and Australia are at the present time very much disturbed.