The Daily News. TUESDAY, JUNE 28, 1921. FINANCE AND TRADE.

Taranaki Daily News, 28 June 1921, Page 4

The Daily News. TUESDAY, JUNE 28, 1921. FINANCE AND TRADE.

The annual review of conditions in the Dominion affecting finance, production and trade, which forms the main portion of the customary address given by the chairman of directors of the Bank of New Zealand, invariably receives that attention which it merits. Necessarily the views expressed therein are strictly moulded from a banker’s standpoint, so that while the facts and figures may be accepted without question, there is room for differences of opinion concerning the deductions arrived at by Mr. Harold Beauchamp, who, in the realm of finance, occupies much the same position as Dean Inge in the ecclesiastical world. Both are keen observers, and exfperts in their particular sphere, and both are overshadowed with a pessimism that has a depressing effect. At the same time it must be admitted that the skeleton at the feast has its use, though most British people prefer courage to excessive caution. Take, for instance, the remark of ME Beauchamp that “even after the American Civil War—which, compared with the great World War, was a trifling affair—it took fourteen years for prices to stabilise, so that, if history repeats itself, as seems likely, it will be some years before the point of stabilisation will have been reached.” No prospect could be more disheartening, for, if the comparison means anything, it implies that for the next half century or so there will be a constant struggle to rehabilitate prices and make both ends meet. Perish the thought! So far as the Dominion is concerned, the depression (such as it is) can only be regarded as temporary, partly due to over importing and in other part to the dislocation of manufacturing industries overseas through strikes causing a collapse in the various markets in which the Dominion is interested. The .financial .institutions, with the help of the State, can assist producers by enabling them to give long credits to European buyers and thus create an appreciable rise in prices. That the banks have largely benefited < by the dairy industry goes with • out saying in view of the fact that j for the last two years the total ex j port value of butter and cheese i amounted to over twenty-three | millions sterling. It has been the! one great ,’aving factor in the I country’s financial position. Mr.' Beauchamp refrained from forecasting the price of dairy produce for the coming season on the open market, contenting himself with expressing the opinion that while the price of butter is not likely to fall to 116 s per cwt., it will not reach the price realised during the war. As regards the outlook for wool, Mr. Beauchamp pins his faith on the law of supply and demand. He recognises, however, that poverty - stricken Europe lacks the money to buy wool unless long credit is given. The producers will give the credit if the bankers will provide the necessary accommodation and the Government will provide a guarantee. That is the only practical solution of the problem, the B.A.W.R.A. scheme being merely an emergency expedient. As every one knows, the prosperity of a country depends upon its ability to obtain more for its exports than it spends on imports. Last year the Dominion’s imports exceeded the exports by over 19J millions in value. Not only had this large adverse balance to be provided for —mostly by the banks—but the freight, insurance, and other incidentals, as well as the interest on public and municipal indebtedness to > Britain. Hence the scarcity of money, the rise in interest rates, and the curtailment of advances, all of which adversely affect trade. The public debt has risen to over 200 millions, involving an expenditure for inferegt and siukiug fund of nearly

eight millions a year. Last year the borrowings on mortgage were twelve millions higher than in the preceding year. Fortunately the spirit of thrift among the people is still satisfactorily in evidence, as testified by the figures of the post office savings bank, and it is quite possible that an appreciable portion of this money might be attracted to the purchase of municipal debentures if sufficient inducement? ate offered. The most serious and alarming phase of the financial position is the enormous increase in Government expenditure, which has risen from 11-J millions in 1913-14 to over 29 millions in 1920-21. Despite all financial handicaps the soundness of the Dominion is beyond question. The need for a courageous and resourceful financial Minister is, urgent.