Art. VIII.—Remarks on the Trade and Public Debt of New Zealand.

By H. W. Segar, M.A., Professor of Mathematics, University College, Auckland.

This is illustrated graphically in Plate XI.

It will be noticed that from 1880 to 1896 prices, as measured by these numbers, steadily declined, with the exception of an interruption which culminated about 1890. The decline for the whole period, as represented by the first and last of the index numbers—viz., 88 and 61—is one of nearly 31 per cent., and this is equivalent to an increase in the purchasing-power of money in the ratio of 61 to 88, or some 44 per cent. In 1896, however, there set in a rapid rise in prices and consequent fall in the purchasing-power of money, which continued to 1900.

Index numbers are calculated by different authors in various ways and from different data with different results, and no one set of index numbers can be regarded as being exact. Indeed, they are intended to represent the average prices of commodities, the very idea of which is more or less indefinite. But, though differing somewhat in the magnitudes of the changes in prices and purchasing-power of money which they indicate, it is remarkable how concordant are the index numbers of different statisticians in indicating always the same tendency to rise or fall. These remarks should be carefully borne in mind in the following application of Sauerbeck's index numbers.

Application of Index Numbers.

We propose to take the exports, imports, and public debt of New Zealand for the years 1880-1900, and to calculate their values in terms of the pound of the year 1880—i.e., to find how many pounds would have been required in the year 1880 to have the same purchasing-power as the various sums concerned in the several years. The values thus calculated we shall call the “general exchange values expressed in the pound of 1880”—(1880)£. By comparing these values we shall be able, notwithstanding the roughness of the method, to form a better idea of the course of trade and of the burden of debt than we could from the ordinary statistics, as the general exchange values thus calculated will represent the

general purchasing-power instead of merely the amount of gold equivalent at the time.

Exports.

The following table indicates the application of the method to the exports of New Zealand :—

This table is illustrated graphically in Plate XII.

It would appear that, though the nominal value of the exports fell off after 1884 and did not recover until 1888, the general exchange value actually increased from year to year throughout this period, though not at as rapid a rate as in the few previous years. Again, after 1890 there was another falling-off in the nominal values of the exports, and the value for 1890 was not exceeded until 1897; but during these same years there was on the average a considerable rise in the general exchange values of the exports, though this rise was not steady. In two years only—1893 and 1895—were the general exchange values substantially less than in the preceding years, and in each case the succeeding year showed a greater value than any previous year. Generally the table of general exchange values represents a far more steady progress in the values of exports than does that of the nominal values, indicating that the great unsteadiness in the latter is due chiefly to the varying exchange value of gold. The

progress of our export trade, then, has not really been nearly so chequered as the ordinary statistics would generally suggest.

It will further be noticed that the increase in the general exchange values of the exports during the last few years has been less rapid than that of the nominal values, which indicates that part of the increase in our exports is only apparent; increased prices and the fall in the purchasing-power of gold would diminish the amount of commodities purchasable by the exports or the credit assigned for the same.

Imports.

The following table indicates the application of the method to the imports of New Zealand :—

This table is illustrated graphically in Plate XIII.

The nominal values of the imports show a considerable depression for many years after 1882. The value for that year was not exceeded until as late as 1899, while the value for 1888 was less than that for 1882 by 31 per cent.

The general exchange values of the imports, however, show a much greater approach to regularity, though not one as marked as in the case of the exports. There is a slight depression in the general exchange values between 1882 and

1885 (the value being the greater in the latter year), but a continuous fall did not set in until 1886, and practically the recovery was complete by 1892. Since that year the increase has been considerable in both values, but proportionally greater in the nominal value than in the general exchange value. To this difference the same remark may be made as in the case of the exports.

Public Debt.

The following table indicates the application of the method to the public debt of New Zealand :—

This table is illustrated graphically in Plate XIV.

A comparison of the two sets of values shows that until quite recently the general exchange value of the amount of the public debt, and therefore practically the burden of the debt, has been increasing far more rapidly than the nominal value. From 1880 to 1896 the debt increased in nominal value from £28,185,711 to £44,366,618, this being an increase of over 57 per cent in sixteen years; but owing to the increased value of the sovereign, according to Sauerbeck's index numbers, the amounts of commodities in general to which these sums were equivalent were in the ratio of 28,185,711 to 64,004,336, which is equivalent to an increase of no less than 127 per cent.