Daniel in the Den

Occupying a suite of rooms at London's swank Savoy Hotel for the past two months has been short, square-faced, blue-eyed Walter Nash. Once a bookseller in the English Midlands, he migrated to New Zealand 30 years ago. Last week he was back in the country of his birth representing his adopted country in a complicated and--for New Zealand--crucial financial deal.

Like many another minister who comes to London these days, Mr. Nash wanted to borrow money. New Zealand's Minister of Finance, Mr. Nash is also the author and executor of a comprehensive economic plan designed to turn agricultural New Zealand into a nation which can at least partially produce its own manufactured goods, and thus be less dependent on world prices. Although realizing that New Zealand will not for a long time be able to supply all its wants, Minister Nash's idea is to build factories to enable the country to manufacture "secondary" articles. And he expects Mother England to supply the necessary capital to get his plan started.

Meanwhile, however, the New Zealand Labor Government, under Prime Minister Michael Joseph Savage, elected first in 1935 and re-elected last year, has raised wages, reduced working hours, increased Government insurance, liberalized pensions, has raised taxes and has scared capital away. Moreover, world wool prices suddenly dropped. New Zealand found herself exporting only a few million dollars worth of goods more than she was importing, so that debt services in London were harder than ever to meet. The country's sterling reserves dwindled from $143,085,000 to $34,035,000. On top of this, an $85,000,000 loan is to mature in London next year. To save New Zealand's currency, early last winter Prime Minister Savage not only set up control of exchange but took the drastic step of restricting imports by 10%, announced that for the last half of 1939 imports would be restricted by 33 1/3%. This move, although resulting in a more favorable trade balance, was deeply resented by British Empire manufacturers who had always had a free and open market in the Dominion.

Against such a background neither Mr. Nash nor his Labor Government was expected to get much sympathy from London's big financiers, who are far more interested in interest payments than in social experiments. The liberal British weekly New Statesman and Nation likened Mr. Nash in the City (London's Wall Street) to Daniel in the lions' den, recalled how badly both the British Labor Government of 1929-31 and the French Popular Front Government of 1936-38 had fared at the hands of the big bankers. There were predictions that before Mr. Nash could renew the $85,000,000 loan, the Labor Government would have to mend its ways.

But Minister Nash, from the beginning of his London stay, showed he had uncommonly winning ways even with hard-boiled bankers. He took time off to explain his social and economic theories not only in the London Daily Herald, the Labor Party newsorgan where he could expect a sympathetic audience, but also in the Financial News, a City newspaper which has often criticized his policies.

"Within a century," Mr. Nash wrote, "New Zealand has been transformed from a virgin wilderness into a land where 1,600,000 people enjoy the amenities of modern life. Wealth has been won and is being won in rich abundance. . . . The country has proved a valuable field for British emigration and investment, a first-rate market, a dependable source of foodstuffs."

As for his economic plan, what was being tried out was a form of "insulation" as distinguished from "isolation." "New Zealand does not seek isolation from the rest of the world, and least of all from the United Kingdom," he wrote. "What we do want is to guard our people as best we can against the disastrous fluctuations that have hitherto marked our economy."

With the British bankers and Government negotiators in person Minister Nash was equally persuasive. He signed with British President of the Board of Trade Oliver Stanley a joint memorandum outlining New Zealand's future trade policy in which Great Britain recognizes New Zealand's necessity for reducing imports, approves the methods adopted. For her part, New Zealand promises to foster Anglo-New Zealand trade, assures Great Britain that no uneconomic industries will be protected. Most important, Britain granted New Zealand $45,000,000 in credits ($25,000,000 to be spent on defense, $20,000,000 on imports of heavy machinery and raw materials) and the Bank of England converted the $85,000,000 loan into an $80,000,000 one consisting of a series of short-term notes maturing from 1941 to 1946. The New Zealand Daniel had also converted the British lions.

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