MR HOLLAND SPEAKS ON FINANCE MINISTERS' TALKS

Marlborough Express, Volume 87, Issue 19, 23 January 1952, Page 2

MR HOLLAND SPEAKS ON FINANCE MINISTERS' TALKS

P.A. Gable

LONDON, Jan. 22.

"This has been a remarkably successful conference," the Prime Minister, Mr Holland, told the New Zealand Press Association at the end of the Commonwealth Finance Ministers' meeting. "As a member of the sterling area New Zealand is.deeply interested in the strength and stability of sterling. Our currency is based on sterling, our overseas reserves are held in sterling and the bulk of our trade is done in sterling. Our whole economic prosperity is therefore involved in the prosperity of the sterling area and especially in the prosperity of the main market for our products, the United Ipngdom. "The crisis has arisen because as a whole the member countries of the sterling area have been spending more than they have been earning and consequently the reserves of the sterling area have been falling at a rapid rate.

"At the rate they were being used in recent months, the reserves of the sterling area would soon have been completely exhausted. That would have meant the collapse of sterling and far-reaching disaster to all countries in the area. ' MOST URGENT PROBLEM "The most urgent . problem therefore was to take action as quickly as possible to stop the drain, and to do this dces involve some unpleasant things. "It was clear that a major cause of these recurring crises was lack of balance between the productive resources of the dollar area and the sterling area in relation to their

needs. Coupled with this is the natural desire of countries within the sterling area to develop their resources as far as possible. In fact the strain of trying to do more developmental work than they can afford out of their own resources has led to the upsetting of their balance of payments through over-importa-tion of goods. "The conference accordingly after planning steps calculated to ensure that there would be ..no further deterioration of the reserves, in fact some measures

of rebuilding in the meantime, devoted much attention to development. "For this more capital is necessary a'nd it will have to come from outside the sterling area. By and large this means from the dollar area where alone it is available in any quantity. However, American capital will not be interested even in a sound and productive investment in the sterling area unless we are credit-worthy. This means that we mus.t put our house in order and demonstrate that our currency is sound and secure."