GOVERNMENT LOANS

Ashburton Guardian, Volume XLV, Issue 10168, 25 July 1924, Page 7

GOVERNMENT LOANS

NEW ZEALAND’S CREDIT. MUST BE MAINTAINED. * (Special to the “Guardian.”) WELLINGTON, July 23. , In concluding his financial statement to the House of Representatives tonight. the Minister for Finance stated : Many suggestions have been made with regard to borrowing a large sum of money for mortgage purposes. It is my duty to point out that this is a matter about which we require to be very careful if we are to maintain our credit in London. The credit of New Zealand stands high at present, but any appearance of recklessness or extravagance in finance would have a very bad effect, and must be avoided by every means possible. Development is going on steadily, and our producers have done wonders during the last two years. Their industry and energy have made New Zealand the most prosperous country in the British Empire, _ but there are still enormous possibilities in front of us—new land to be brought into cultivation, and that which is already cultivated made more productive still. Science has done much for the primary industries, but I believe it will do a great deal more in the future. I want particularly to strike a warning note about over-borrowing, and in doing so I admit that we cannot go on developing 'without a certain amount of loan-money, but it has to be remembered that every million borrowed increases annual charge upon the country, i and in most cases the burdens upon the taxpayer. This is the case whether the money is borrowed by the General Government or the Local Bodies; the effect is the same. Care should be taken, therefore, to see that borrowed money should, as far as possible, be used only for revenue-earning purposes. This is the policy which the Government have followed since the end of the war—that of building up against the public debt a collection of assets which will go a long way towards providing the interest and sinking fund on the borrowed millions; and I am glad to bo able to say that both the values and the earning-power of these assets are steadily increasing. That the operations of countries borrowing are very closely watched by the financial authorities in London is quite evident from what took place quite recently,- when a British country asked for a fairly large loan at what seemed a reasonable rate of interest, and the underwriters were left with 85 per cent.

of the proposed amount on their hands. Our credit is a most valuable asset, and it requires to be safeguarded accordingly. . , , The year’s operations are a proof or the industry and energy of the people of New Zealand, especially cf its producers. Economy and self-reliance are qualities that should bo encouraged and must be observed if the character of the people is to bo maintained and the country is to prosper as we hopo and believe it will. We are now in a fairly good position. With proper management we should be able to retain our prosperity and keep development going for a long timo to come. What we , have to avoid is an era of extravagance, of which there are already indications; but I hope the good sense of the great mass of the people will be used to pre- | vent and possibility of the earnings of the community being squandered for unnecessary purposes.