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European Recovery Programme As members will recall, Marshall Aid (or the European Recovery Programme, as it is officially called) has run more than half its course. The great effort of the Western European peoples to restore their production would have been greatly impaired without the raw materials and plant provided under Marshall Aid, and this has resulted to the advantage of New Zealand in maintaining high prices for its wool and other products. Allied to Marshall Aid there has recently been approved a plan for a European Payments Union designed to overcome or minimize exchange difficulties between the countries concerned and thereby facilitate freer trade. Because the sterling area is a member of the European Payments Union we are now able to admit imports from Belgium, for example, as freely as from soft-currency countries such as France, Italy, and the Netherlands. It is pleasing to note the measure of economic recovery in the position of the United Kingdom and the sterling area in general. As external trade is such an important feature in our own economy and the United Kingdom is by far the largest buyer of our exports, we have more than a sentimental interest in the state of affairs in the United Kingdom. Since the devaluation of sterling last year the sterling area's gold and dollar reserves have risen from $1,340 million to $2,422 million at the end of June last. This heartening recovery was due to the better competitive position of sterling-area exports combined with better business conditions in the United States. We are, however, not yet at the end of our dollar difficulties, and the improvement so far does not justify any general relaxation of efforts to limit dollar payments and to increase our dollar earnings. Although the size of the reserve has nearly doubled, it had fallen to a dangerously low level in 1949. The present figure is still very small relative to the huge amount of sterling-area trade, and therefore not adequate to buttress anything beyond minor fluctuations in the ebb and flow of trade. Prior to the war the sterling-area reserves amounted to more than $4,000 million, or the equivalent of $lO,OOO million at present price-levels. New Zealand's Overseas Funds Turning to our own position the level of our sterling reserves cannot be regarded as satisfactory. But for a fortunate phenomenal rise in the price of wool, it would now have been a matter for considerable anxiety. Over-all, the production season for 1949-50 was a good

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