OVERSEA BALANCE

Wairarapa Times-Age, 2 December 1938, Page 5

OVERSEA BALANCE

NEW ZEALAND’S POSITION VIEWS OF LONDON LABOUR PAPER. CAUTION FOR TIME BEING SUGGESTED. By Telegraph—Press Association—Copyright. LONDON, December 1. The “Daily Herald” (Labour and Trade Union), recording the abatement of the New Zealand exchange flurry which provoked an increase in the discount rate, says that a deficit in the Dominion’s balance of payments of £7,000,000 or £8,000,000 is likely, but that the London funds have also fallen by nearly £12,000,000, the difference between this figure and the amount of capital exported during the year before the election. The newspaper suggests that, if the Socialist experiment is being built firmly, it is worth considering in advance measures that might be taken to meet a fall in the export surplus or a flight of capital. If it becomes substantial, a falling export surplus might be countered by higher tariffs on luxuries or by suitable devaluation, which should not be. regarded as a disaster, but as a natural economic adjustment. A real flight of capital could be met by a refusal to grant foreign exchange for that purpose.

The “Daily Herald” adds, meanwhile, that it would probably be wise to moderate momentarily the expansionist policy, particularly as regards public works and loans from the Reserve Bank.