The Coming Slump!

Maoriland Worker, Volume 2, Issue 27, 8 September 1911, Page 5

The Coming Slump!

(Contributed.)

The -"Auckland Weekly News" of August 17 in a sub-leader headed "National v. Local Trade," publishes some statistics which exhibit the fact that th© exports of New Zealand during 1910-11 only exceeded the imports by £2,509,907, whereas in 1909-10 the exports exceeded the imports by £6,644,----906, and that during the five yeajps 1906 to 1911 the total excess of value of exports oveir imports was only £14,----894,263 —so that assuming the interest due upon borrowed (public and private) from abroad to be four million annually we have during the last five years increased our nett indebtedness by at least ten millions.

A most disgraceful state of affairs surely, for a country like New Zealand, with a population of a little over a million people, which is perpetually boasting about the wonderful fertility of the Dominion., a fertilitj' which with any sane Government at all should yield, ample wealth to supply all the wants of the people, pay for all their imports, and, in addition, pay all interest due on existing loans and have something over to go towards sinking funds as well, so that we might expect our entire indebtedness to England to be paid off in from 15 to 20 years.

It should be noted that while the exports have decreased by £1,400,813 in 1910-11, the impo-rts have, notwithstanding this actual diecrea-s© in purchasing power, increased £2,734,206 over the previous year. Thus it •will be seen that not only has the amount of wealth exported per head actually decreased, notwithstanding the high prices obtained for various products, but in spite of this, imports have exceeded those of the previous year ; thus proving that 1910-11 has been a phenomenal year for borrowing and thus getting further into debt; in other words, of loafing upon outside capital, instead of paying our way. And that this is true is proved by the fact that in addition to a huge increase in the public debt, mortgages on th© lands of the country have increased by some millions over the previous year, and a very large proportion of this borrowed money is being squandered upon imported goods and on easy living in-

stead of upon the production, of wealth for export.

It must not, however, be imagined that a country's prosperity is to be entirely judged by its exports and imports, much less that its exj)orts represent all a country produces and its imports all it consumes, as a. country, in. times of prosperity particularly, may produce a great deal which it consumes locally. A country, therefore, might be very prosperous, yet export and import less than in times of depression in its trad©. And in proof of this fact, it will invariably be found that a country exports more and imports less in time of depression and monetary tightness than in. times like the present, when everything seems to be booming or next door to it.

The reason of this apparent paradox is that periods of pJaenomental prosperity ar© invariably periods of excessive borrowing, and as it has been well said that "those who go a'borxowing go a-sorrowing" when the borrowing is at an end and land values have reached a point which leaves no margin for further speculation there comes a slump and those who have to meet obligations for interest, bills and repayment of loans must curtail their private expenses to the bare existence point, and sell all they can produce to pay their debts.

In the article referred to at the beginning of this -es&ay the writer attributed the sudden falling off of exports referred to to the Government locking up the remaining Crown lands but such a contention, is childish in its absurdity. For there is more- land in the hands of the public now than there was in 1909-10, when the exports were larger than in any single year in the hi&tory of the Dominion. Hence it is very clear that it is not the Government who is stopping the people producing from the land. The truth is that the land speculator —or rather let us say, land speculation—is really at the root of the whole matter, and until the people are ready to adopt a, system of land taxation that will for all time abolish land speculation, we- will continue to get into debt and have periodical slumps such as we are absolutely certain to have within the next 18 months. What that system of land taxation hinted at above really is and how it would operate must be left for consideration.