PAST YEAR’S ACHIEVEMENTS.

Manawatu Herald, Volume L, Issue 3891, 5 January 1929, Page 4

PAST YEAR’S ACHIEVEMENTS.

PROSPECT FOR NEW YEAR. The past year may be said to have been a year af recovery for New Zealand. Almost from the commencement of 1928 the foreign trade of the country began to show adjustment features which culminated at the close of the produce year ion 'September 30 in an excess of exports over imports of 'over £11,000,000. This should have .resulted in greater industrial activity and a greater volume of domestic trade, but, unfortunately, confidence appeared to" be lacking, and the country has had to bear the burden of unemployment right up to the present. There has been no lack of funds during the past six months, as the banking returns have disclosed, but the abnormal growth of fixed deposits merely emphasises the fact that confidence has been wanting. The substantial increase in the volume of capital as the result of a favourable trading year has caused monetary rates to decline, and money is to-day in greater supply and cheaper than it was a year ago.

There exist now abundant reasons for confidence. The New Year opens under favourable conditions. Our staple products such as butter and cheese, wool, and meat, ace on price levels that arc profitable to the producers, and furthermore, there is an increase in production, so that unless unforseen circumstances aiise the current 'export season should again result in an excess of exports over imports, or, in other words, a favourable trade balance. The factors for a prosperous year exist, and what is needed now is confidence. That confidence is returning slowly. It is within the power of the Government of (the day to stimulate that revival. A country like New Zealand, so wholly dependent upon foreign markets for its prosperity and progress, cannot disregard affairs in Britain the United States, and Europe. The storm centre of monetary disturbance appears to be the United States, the •world’s great creditor nation. For over twelve months there lias been intense speculation in stocks and shares on the New Year Stock Exchange. It has been a “bull” market of great strength, in which the outside public has taken a prominent part. In spite of the repeated ‘ warnings ; of prominent bankers and financiers, and high rates of interest for call money, the gamble has continued. As a matter of fact, call money has not been lower than G per cent, at any time during the past six months. On December 7, when it reached 12 per cent., there was a big break iif prices, and the depreciation was estimated at £400,000,000. Twenty days later call money for renewals opened at 10 per cent., rose to 12 per cent., fluctuated until it again touched 10 per cent., but soon rebounded to 12 per cent., closing at that rate. New Zealand has not been told what the effect 'has been, but that there have been very heavy losses must be obvious. This state of affairs in New York lias resulted in heavy withdrawals of gold from London. At the end of October the gold in the issue department of the Bank of England amounted to £163,457,000, and it isjiow reduced to £155,211,000, a loss of .over eight millions in about eight weeks. A very heavy strain has been, placed upon London, and it is doubtful whether the strain can be sustained much longer, The Bank ,o£ England may be compelled to raise its discount rate to protect its gold reserve. The bank rate is now 4£ per cent., and if it must be raised it will move to 5i per cent., for it is usual to advance the rate 1 per cent. 'This would make money dear in Britain, and that must affect commodity prices, and so bring about a reduction in the prices for the products the Dominion markets in England. This is the danger that confronts New Zealanders, and there i« nothing that they can do to dissipate it. Apart from this the outlook for the Dominion is exitremely good, and 1929 should be a year of prosperity.—Dominion.