MONEY AND BUSINESS AFFAIRS.

Manawatu Standard, Volume LX, Issue 243, 11 September 1940, Page 12

MONEY AND BUSINESS AFFAIRS.

POST-WAR ECONOMICS. (By Borrowing by local bodies, except for very urgent works, should be discouraged especially during this war period. The conversion of maturing loans is, of course, necessary, but new loans should not be issued. Tor a long time now the London market has been closed, and we may regard the Australian money market also as closed to us; therefore any new leans would have to be raised within the Dominion, and it is necessary to bear in mind that its total population is only 1,640,000, and this small handful of people cannot carry ever increasing loads of debt and taxation. The State lias been adding to the debt of the country in large sunns each year, and must go on borrowing. The State, however, has the Koserve Bank to draw upon, and has drawn very heavily from that institution, the advances to it on Monday of last week exceeding £23,000,000. The Siate may be obliged to issue a loan in the open market and when it does so, it will take all the savings. But borrowers —indeed everyone —must not be deluded by the heavy war and other expenditure. We had similar expenditure during the last war, and it was followed later on by a severe economic depression. ft would seem that some people have not learned any lessons from past experience.

For our economic conditions to be entirely satisfactory after the war we must obtain as good an export income Ec at present; for the year ended June 30. 1940. it was over £65,000,000. There is not, at this stage, much prospect of this. We will be quite safe for a year after the close of the war for the commandeer prices are to be continued till then, but it is afterwards that we may have to face a lower sum. In the case of dairy produce good prices are being obtained at present. When the war ends the Danes arc bound to make strenuous efforts to recover their standing in the British market. Just at present the Danish industry is in a very bad position. The Danes have always had to rely on imported feed for cattle and pigs, and the British blockade has cut that our, with the result that the Danes have had to slaughter a great many of their cattle and pigs, which have gone to feed their German, masters. Still, Denmark will be able to supply butter, and will force supplies on the market no matter what may be the ruling prices. The British people cannot pay heavy taxes and maintain at the same time a high standard of living, or a standard equal to _ pre-war timee. So they will not pay high prices for foodstuffs. For a vear after the close of the war, as already stated, New Zealand will still be getting the commandeer prices, but after that, unless the arrangement is altered, will have to compete in the open market. Denmark would have a whole year to get used to the market before we are free and it is quite possible Britain rnav have to give the Danes credits to aid'them in restoring industry and helping in international trade. What the writer is endeavouring to indicate is that the post-war markets like the post-war currencies will bo difficult. The purchasing power of the British public, and the public of all Europe must be very much restricted. and the demand will he for goods as chc j ap as possible. Should overseas market prices for primary products decline, as seem; inevitable, that would necessitate changes in our economics. To moot markets where lower prices rule, our costs of production must fall.

Economic laws do not take any notice of nations, races, individuals, but treat thorn all alike whatever be their economic systems, whether they belong to the new era, or to the old era. Nor do economic law= take notice of standards of living, or political slogans: if the laws are broken there are reprisals, and sometimes the reori=als are long in corning. Economic laws insist upon a balanced position: that is wages, costs, prices, interest, rent, borrowing* lending, saving, etc., must all be in balance, but we never pet the balanced position, and just now the balance has been violently disturbed by the war. In all directions there are unbalanced. position'. International trade, which is the foundation of prosperity, bar? rude.v disturbed. Europe can neither buy nor sell to overseas countries: prices of commodities are high: the money exchanges p<-c out of rear: borrowing and lending to the States is on a big scale, and wages, co =, s and taxation are high. Such, a disturbance of the economic balance has not been known in aU history. It was not so dis'itrbed tn the last war. As soon as the war end' ihe process of restoring some kind of a balance, will begin immediately. To deaden the impact as much as possible the best.course to pursue is to save now. hearing in mind that a man with a pound in his poc-kc, is better able to stand up to difficult times than one who has only sixpence in h:= pocket.