ECONOMIC FUTURE

Wairarapa Times-Age, 12 July 1938, Page 3

ECONOMIC FUTURE

OUTLOOK FOR DOMINION INFLUENCES FROM OVERSEAS. SHOCKS COULD BE SOFTENED. The financial outlook and the prospects of guarding against another deep recession in trade were discussed by Mr H. J. Kelliher, managing-direc-tor of Dominion Breweries, Limited, at the annual meeting of shareholders in Auckland on July 7.

“Unfortunately,” said Mr Kelliher, “finance and economics are subjects into which the average person refuses to delve very deeply. Yet it is impossible to obtain a clear conception, or even a reasonable understanding, of the working of our economic and financial system, without at least a superficial knowledge of those vital factors which dominate our national life. ROOM FOR EXPANSION. “There may be a wide divergence of opinion as to what the future has in store for us, and to what extent we can guard against the unfavourable reaction of overseas happenings and influences. But the welfare and prosperity of our own company, the same as every other business in the Dominion, is closely wrapped up with the economic security and stability of the country itself. Our own business, the same as commercial enterprise generally, has benefited by the general expansion of the past two years, but no one will doubt that there is still considerable room for further expansion. “By way of comparison it is interesting to note the progress made by Australia in this connection. Bank credit has been expanded by way of advances by approximately £60,000,000 above the 1931 level, while in New Zealand it was only during recent months that we caught up with the 1931 figures. If Australia can expand to this extent without the dangers usually associated with inflation, New Zealand has nothing to fear from expansion in a similar ratio. What is equally important, effective safeguards must be provided to prevent undue credit contraction and the disastrous effects which inevitably result therefrom. “I am not one to believe that this little country of ours can ever become entirely self-contained; nor can we ‘immunise’ ourselves completely from the financial and economic shocks that occur periodically in other countries and over which we have no control. But I do believe that, by placing on a sound foundation those economic and financial means over which we have control, we can soften those shocks and guard against the violent fluctuations which in the past have caused havoc with our economic structure. SOME REFORM ESSENTIAL. “I go further and say that unless we do this, unless we institute essential and adequate reforms in our existing system, and unless we establish a certain measure of economic and financial independence, instead of relying entirely on overseas conditions, the future will be very uncertain indeed. “In that connection it should be evident that if the stability of the purchasing power of money is to be achieved a stable internal price level should be made the prime aim of monetary control and regulation. This means that the supply of purchasing power must not only be adequate, but must be controlled and regulated so that the New Zealand pound will buy, as near as reasonably possible, the same volume of commodities today as next week or next year. “To maintain that the present system cannot be reformed and improved so that it will produce results less unjust and less absurd than we have witnessed during recent years is a reflection on our common sense. For it must be obvious to anyone who has given even a passing thought to our present financial and economic position that unless we institute such reforms we will never be able to struggle from under the mountain of debt

and taxes that is crushing us today. “I have no doubt in my own mind that it is quite practicable to effect such reforms, reforms that will enable both credit and currency to be controlled and regulated in sound ratio with the produced wealth of the country, thus ensuring stable purchasing power on a commodity basis. It is by adopting such a policy that we may hope to achieve financial stability and economic security, as well as a fair measure of lasting prosperity.”