B. —6,

quota system was introduced. In addition, and arising out of previous negotiations, the threatened levy on New Zealand mutton and lamb imported into the United Kingdom will not now be proceeded with. While in England I took the opportunity of visiting the principal wholesale markets handling New Zealand produce, and later of discussing the question of quality and supplies with the more important retailers. lam satisfied, as a result of those investigations, that the principal lines of New Zealand produce compare favourably with any at present on the English market —the most discriminating in the world. An interesting feature associated with the new marketing policy for butter is that whilst Danish prices have always commanded a margin over New Zealand, the last season, according to the report of the Imperial Economic Committee, shows that whilst New Zealand butter with a record output was 10 per cent, higher in price than in 1935, Danish prices showed an appreciation of only 6 per cent. Preliminary negotiations were carried out with representatives of the Governments of France, Germany, the U.S.S.R., the Netherlands, Denmark, the Irish Free State, Palestine, Yugoslavia, Southern Rhodesia, Canada, the United States of America, and Panama. There are reasonable hopes that as a result of these negotiations further markets will be developed for New Zealand produce. In company with the Right Hon. the Prime Minister, opportunity was taken to discuss with the Imperial Government outstanding questions regarding defence, air communications, foreign affairs, and shipping, and an agreement was reached on various matters of policy. These subjects will come up for your consideration later. Careful investigation was also made into housing problems, and the latest advances made in the United Kingdom were inspected. The New Zealand Government's overseas publicity work was reviewed in order that improvements may be introduced with a view to making a more effective appeal both to potentialfconsumers of our produce and to prospective tourists. Detailed inquiries were made as to processes, costs, output, &c., in the sugar-beet, iron and steel, tire, coal carbonization, and other industries. The information obtained will be invaluable when decisions are required relative to the extension of secondary industries within the Dominion. Opportunity was taken while in London to discuss the Government's policy with the highest financial authorities, who are well informed on matters affecting New Zealand. The development of the present Government's policy is being watched with keen and sympathetic interest. Although the Government do not contemplate borrowing again in London, other than for necessary redemption purposes, it is satisfactory to note that our credit stands very high in the eyes of the investor. The only loans raised in London by the present Government have been for conversion purposes, the last loan incidentally being on as favourable terms as have been accorded to the Dominion during the present century. INTERNAL MARKETING. While paying particular attention to maintaining and extending the Dominion's overseas markets as an influence affecting our general prosperity, the Government have not overlooked the important matter of internal marketing. It is true that approximately 70 per cent, of our agricultural and pastoral production is exported, but it is obvious that the marketing of the remaining 30 per cent, is a vital factor in the national economy. Internal marketing has accordingly been the subject of very careful investigation by the Government, and, as a means of implementing the Government's policy, an Internal Marketing Branch of the Primary Products Marketing Department was established in February last, and at the same time the business carried on by Picot Brothers, Ltd., was acquired by the Government. At the time of purchase this company represented the largest wholesale dealers in primary produce for the local market in New Zealand. The business, which included premises, plant, and stock-in-trade, was acquired on a valuation basis, while the services of the managing director were retained as Director of the new Branch.

Further negotiations.

Defence, foreign affairs, &c.

New industries.

Financial policy.

Local markets,

Acquisition of Picot Brothers' business.

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