Wairarapa Times-Age THURSDAY, OCTOBER 17, 1940. ONE PART OF A BIG QUESTION.

Wairarapa Times-Age, 17 October 1940, Page 4

Wairarapa Times-Age THURSDAY, OCTOBER 17, 1940. ONE PART OF A BIG QUESTION.

JT is well established that, the maintenance of export trade takes a necessary and important, place in Britain’s war effort. On that account, serious notice is likely to be given to a complaint by the president of the United Kingdom Manufacturers and New Zealand Representatives’ Association (Mr E. A. Christie) that this country is imposing undue restrictions on the importation of British goods. Quoting a cablegram from the Birmingham Chamber of Commerce to the effect that United Kingdom manufacturers are able and anxious to export to New Zealand, but are gravely disappointed at the severity of the import restrictions, as well as with regard to the ungenerous time limit imposed for the fourth import period,.Mr Christie urged that “New Zealand must import from the United Kingdom to the. fullest possible extent in order to respond to the United Kingdom war export drive.” With the contention thus advanced it is impossible to-do anything else than agree completely, but what is “the fullest possible extent” to which it is open to this country to import from the United Kingdom? That obviously is a question to be determined -in light of the total facts. If nothing else, had to be considered than Britain’s ability to send us acceptable exports and our willingness to absorb these goods, no difficulty would arise. Actually, however, a number of other factors have to be considered, amongst them that of the heavy addition the war is making to this country’s overseas commitments. The ruling that licences to import goods in the fourth import restriction period are to expire on December 31 next if the goods do not arrive in New Zealand by that date no doubt is fairly open to discussion. The fact has to be faced, however, that unless imports by some method are restricted to an adequate extent, we shall not only run into difficulties on our own account, but shall embarrass Britain and in some measure hamper her war effort by failing to meet debt payments as they fall due. Our total resources are definitely limited and we cannot at one and the same time engage in unrestricted import trade and meet our obligations in other directions. At present, as compared with last year, we have increased substantially our export balance and the amount of our net overseas assets in London. In New Zealand currency, our excess of exports for the twelve months ended in July, 1940, was valued at £21.2m, as compared with £B.lm for the preceding twelve months. This is a considerable improvement, and the . same trend appears in the figures of the Dominion’s net overseas assets, -which at the end of August last stood (in New Zealand currency) at £24.7m as compared with £B.Bm in August, 1939, and 20.5 m in. August, 1938. Our imports for the twelve months to the end of last July were valued (in New Zealand currency) at £46.0m as compared with £55.9m for the preceding twelve months. At a merely superficial view, the disclosure for the twelve months to July, 1940, of a favourable trade balance of £N.Z. 21.2 m may appear to justify a fairly considerable expansion of our import trade from Britain. An. optimistic estimate of this kind will hardly bear examination, however. While the trade balance for the twelve months to July last was substantial, the corresponding balance for the preceding twelve months amounted to little more than half of the sum needed to cover our current overseas liabilities. Moreover, in the conditions now developing, a favourable trade balance of £N.Z. 21.2 m cannot be regarded as covering our overseas commitments other than trade payments. In recent years an annual amount of some £N.Z. 14m has been needed to meet debt and other charges overseas. For the next four years there has to be added a sum of £3.5m per annum—payments in redemption, of the 1940 conversion loan. Other heavy loans domiciled in London are falling due for redemption within the next few years. Last, but by no means least, there is the factor of war costs. It is the declared policy of the Government to meet some part of our external war costs from current resources, and this can only be done by drawing on the favourable’ balance of trade. There are other aspects of the position and outlook -which need to be kept in mind in considering the question which Mr Christie, in his statement on behalf of importers, dealt with from one angle only. Account, has to be taken, for example, of the marketing outlook. While the war of necessity is adding heavily to our capital obligations overseas, it is no doubt to be taken for granted that during the war period our produce exports will continue to command good prices. That as good a market will be available when the war is over appears improbable. The whole of the factors involved, and not least that of our heavy and increasing overseas capital obligations, in any ease ought to be taken into consideration in discussing and dealing with such a question as Mr Christie has raised in his plea on behalf of British manufacturers and Britain’s war effort. No ’ good purpose can be served by isolating one part, of this question and treating it as the whole. We shall best co-operate with and assist Britain by using our resources to the best advantage in meeting our obligations and in prosecuting the war. It is certainly desirable that we should do as much trade as possible with the Mother Country, but we should not assist her by engaging, as we have in recent years, in such an orgy of import trade as to impair our ability to meet our maturing capital obligations—obligations now being increased by the war to an extent which is still, far from being measured. In any practical shaping of financial policy, or criticism of that policy, full account must be taken of our overseas capital obligations, present and. prospective.

ITALY’S POLICY OF DENIAL.

JN the naval, action in the Mediterranean in which lI.M.SJ Ajax has added to her renown, the Italians have suffered a double defeat, first in the loss of warships and aircraft, and secondly in the exposure as a tissue of falsehoods of the report issued by their High Command. The facts explicitly set forth in. a British Admiralty communique are that in the operations in which three Italian destroyers (one of the latest type) were sunk, the Ajax suffered only a few casualties and superficial damage, while the supporting cruiser York sustained neither casualties nor damage. In an air attack on the British fleel. the Italians lost at least four planes, two others also probably being destroyed, and inflicted neither casualties nor damage on the Brit ish ships. The encounter in which the British cruiser Liverpool was torpedoed,.but got safely back to port, evidently occurred later. These are the facts to be set against the Italian claim that a British cruiser was sunk in the naval engagement and a heavy cruiser and aircraft-carrier damaged by air attack.

Endeavouring with unblushing mendacity to cover up their defeat, the Italians have instead emphasised and added to its effect. Obviously they can hope at most to deceive only some of their own people and others subject to totalitarian propaganda. They cannot hope to achieve a completely successful deception even in their own camp. The propaganda tactics of its High Command will hardly tend to raise the morale of the Italian Navy or encourage it to improve upon the policy of hasty retreat it has pursued since the war began. The total facts suggest that the Italian sea forces are little enough inclined to play the part they presumably are expected to play in connection with the Axis offensive operations now taking tentative shape in the Balkans. 11 has a decidedly important bearing on these operations that the Italian Heel evidently feels itself unable to face its enemy in battle and that its High Command feels itself equally unable to face the facts. It has to be admitted that the fate that has overtaken Italian warships that have ventured out of port is not in itself calculated to encourage others to follow their example.