Wairarapa Times-Age SATURDAY, JULY 22, 1939. OUR LATEST DEAL IN LONDON.

Wairarapa Times-Age, 22 July 1939, Page 6

Wairarapa Times-Age SATURDAY, JULY 22, 1939. OUR LATEST DEAL IN LONDON.

J)IFFI CULT IES arising from the serious depletion of this . country’s sterling funds will be eased for the time being by the British Government credits the Minister of Finance (Mr Nash) has secured after extended and apparently difficult negotiations. The utmost benefit to be expected in this way, however, is that of a brief breathing space. Though the terms on which they are granted have not been stated at time ol writing, the credits probably in effect are a short-dated loan, the repayment of which will make a heavy call on national resources during the next year or two. According to the City editor of the London “ Daily Herald.” the £17,000,000 loan conversion now being negotiated is likely to be on the basis of a short-dated public, issue repayable between 1941 and 1945. With other oversea loans of large amount falling due in the near future, the total prospective call on the Dominion’s resources is very heavy indeed. Some immediate relief will be obtained from the grant, of credits. These are to amount to a total of nine millions sterling (approximately £11.25m in New Zealand currency)—five millions sterling for defence and other Government purposes and four millions sterling for private imports. The new obligation of defence expenditure will absorb a substantial part of the total sum, and reduce correspondingly the relief afforded. Whatever its precise details as to rates of interest and terms of repayment may amount to, the total effect of this transaction will be to emphasise the necessity the Dominion is under of allotting an appreciable part of its resources lor a number of years to come to the redemption of debt domiciled in London. It is only by this policy of independent self-reliance that we can strengthen our national financial position, at home and abroad, and make an end of the decidedly disadvantageous and somewhat humiliating circumstances in which we are at present negotiating the renewal of a loan of £17,000,000. Had we been able to repay any considerable part of this loan, the terms obtainable -on the London market, and comments.in London on the financial standing of New Zealand, would alike have been much more favourable than they are at present. Starting as we now do from a point at which our favourable balance of trade falls considerably short of enabling us to make adequate provision even for current demands under the headings of trade and debt service, apart from any question of capital repayment, it is obvious that our imports must be reduced substantially from what the British White Paper issued on the subject describes very justly as “their recent abnormal level.” Much as business disorganisation and losses are. to be regretted, the simple fact stands that the Dominion has been importing more goods than it can continue to pay for and must now, as a London commentator has said, cut her coat according to her cloth. It is clear that we must reduce imports (either by the methods at present in force or by some alternative methods), not only in order that annually recurring trade and debt service demands may be met punctually, but in order that maturing oversea loans, including the temporary accommodation now being arranged, may be dealt with in some practicable fashion and at a cost within bounds. The last-mentioned necessity is likely to be made pointedly manifest when the terms of the £17,000,000 conversion have been disclosed. In effecting the financial adjustments which have taken shape in the grant of export credits and in “satisfactory progress” in tire negotiations for the conversion of the £1.7,000,000 loan, Air Nash appears to have been subjected to remarkable pressure with respect to trade policy. According to the British White Paper and to the parallel statement made in this country by the Prime Minister (Mr Savage), British Ministers informed Mr Nash that they were apprehensive as to the permanent effect on United Kingdom export trade of a policy (of import restriction) designed to meet a temporary difficulty in New Zealand, and it is added that: —

Mr Nash ... undertook that, as circumstances permit, the New Zealand Government would do their utmost by the relaxation of restrictions to ensure a maximum expansion of trade between the United Kingdom and New Zealand, consistent with the maintenance of sound economic conditions and the Government’s obligations to existing industries.

Mr Nash assured the United Kingdom Ministers that it was not the intention of the New Zealand Government to employ the import licensing policy in order to give protection to New Zealand industries against the import of United Kingdom goods on a scale which prevented full opportunity for reasonable competition.

A great deal depends on the interpretation in detail of stipulations of this kind. It may be observed, however, that while the whole import licensing policy is on trial, and quite conceivably may give place to alternative methods, a demand that British goods of any and every kind should be admitted to this country on terms of “reasonable competition” could be interpreted to imply conditions in which the existence of virtually all manufacturing industries in the Dominion would be menaced. It must be hoped that Britain will not endeavour to obtain, much less to enforce, any such interpretation.

While, however, if is recognised in the British White Paper, and in some London Press comments, that New Zealand is bound to reduce her imports, at least one British Minister, Mr R. S. Hudson, the Secretary for Overseas Trade, appears to be blind to that commanding fact. He was reported yesterday as warning either this Dominion or the Dominions generally, that any curtailment of United Kingdom exports would reduce the Mother Country’s willingness and ability to buy and would impair her economic strength at a time when it was vital that it should be maintained in order to defend the Empire. New Zealand’s answer to Mr Hudson can only be that she has been buying more than she can pay for and that honesty and self-respect must constrain her to buy less in the immediate future.