Title: War Economy

Author: Baker, J. V. T.

Publication details: Historical Publications Branch, 1965, Wellington

Part of: The Official History of New Zealand in the Second World War 1939–1945

This text is the subject of: ‘Something of Them Is Here Recorded’: Official History in New Zealand

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Payments

Import Payments, 1939 to 1946: £341 million: This is a most unsatisfactory classification. It relates to a portion only of total imports.

Actual import arrivals, valued at 10 per cent above current domestic value in their country of origin, totalled £510 million in the eight-year period.² Included in this £510 million were some £73 million of Lend-Lease supplies and Canadian Mutual Aid for which import payments did not have to be made.³ Imports for which payments had to be made were in the region of £437 million, but this includes Government as well as private imports.

Records of import arrivals included Government imports of defence stores, valued at some £105 million, and other supplies for the Government, at some £70 million. Part of these supplies came under Lend-Lease and Canadian Mutual Aid, but the rest, amounting to some £100 million, would be paid for by the Government. Government payments for imports are, in the main, included in the item ‘Other Payments’.

No satisfactory reconciliation of these transactions is possible. page 389 Some £437 million of imports had to be paid for. £341 million of mainly private payments were covered by the overseas exchange item ‘Import Payments’, and some £100 million of Government payments were included under ‘Other Payments’. As with exports and export receipts, there are timing and valuation differences between the figures for imports and import payments.

Government and Local Body Debt Repayments: £124 million, roughly: Progress payments, reimbursing the United Kingdom Government for the cost of New Zealand forces overseas, as provided for under the Memorandum of Security, were recorded under this item. £60 million was paid in all to meet this commitment in full before the end of 1946. Other overseas loans totalling nearly £30 million were paid off in 1946. This effort, made possible partly by setting aside the lump sum payments received from the United Kingdom, enabled New Zealand to complete her war effort with her overseas debt lower than before the war.

Interest on Government and Local Body Debt: £55 million, roughly: As a result of loan repayments and of efforts to finance the war out of internal loans or taxation, this was a reducing item.

Other Payments: £228 million, roughly: This is another most unsatisfactory classification, which badly needs to be subdivided. For a start, it includes some £100 million of Government import payments. About £14 million of overseas payments on account of United States authorities and personnel are also recorded here.

Total Payments: £747 million: Excluded from this total are some £105 million of Lend-Lease goods and services for which no charge was made, but which were offset in the main by Reverse Lend-Lease supplies from New Zealand;¹ also £6 million of Canadian Mutual Aid. Included are special wartime payments for defence equipment, maintenance of New Zealand forces overseas and other commitments which would not continue into peacetime, totalling about £150 million.²

Excess of Receipts over Payments, 1939–46: £94 million: The balance for the whole period was an excess of receipts over payments of overseas exchange amounting to £94 million. In the main this favourable balance affected the overseas assets of the banks, which increased by £101 million, from £7 million at the beginning of 1939 to £108 million at the end of 1946.