DOMINION FINANCE.

Auckland Star, Volume XLVII, Issue 17, 20 January 1916, Page 8

DOMINION FINANCE.

A CHEERING OUTLOOK. I LOCAL WAR LOAiN. * ', (Special Correspondent.) WELLINGTON, January 17. • Tt is to the credit of the Reform , party that, with very rare exceptions, ' the rank and file of its well-disciplined army raised no protest when their leaders, recognising all the difficulties of . the situation and the need for capable : as well as prudent administration, entrusted the finance of the country to ' Sir Joseph Ward, the man whom through twenty years of strenuous party fight- ! ing they had been a£ked to regard as possessing none of the qualities required for the occupancy of a high office in the ' councils of the State. It must he to the comfort of the party now that its ! leaders had the courage in the circumstances to seek the assistance of Sir Joseph at the most critical period in the history of the Dominion. The statement which the Minister of Finance supplied to the newspapers on Saturday, showing the receipts and expenditure for the first three quarters of the financial year, is far more than merely satisfactory. It is highly gratifying. It con-1 firms the Minister's estimate of the needs of the position, it proves the soundness of his proposals, and it demonstrates the elasticity of the resources of the country. That the ordinary receipts should-be increasing at the rate of a million a year ■in war time and that the ordinary expenditure should be substantially decreasing are not only matters for general congratulation, but also justification for national optimism. \ THE QUERULOUS NOTE. The only querulous note that has greeted Sir Joseph Ward's statement of the public accounts appears to have been provoked by the Minister's announcement that he could sec no reason why the rates of interest to private borrowers should be increased. "How," asks the local organ of the capitalists, "does Sir Joseph Ward reconcile the Taising of the rates of interest by the State, in the price it is paying for its loans, with his subsequent declaration that there is no earthly reason why the xate of interest should go up in this country, and is warning against any attempt to force up the value of money!" This is a characteristic question for the organ of the capitalists to ask,' and its suggestion is neither generous not patriotic. The implication is, of course, that by alio ring the holders of local debentures at four per cent falling due up to 1924 to convert into debentures at four and a-half per cent with a currency of twenty-five years, the Minister himself is providing an excuse for len-1 ders exploiting their clients. The assump- j tion that the Government paying four and a-*half per cent on such local debentures as may fall due due during the next seven or eight years will justify, rates in the open market advancing from five or six per cent to eight or nine, or even ten or twelve _per cent would be a little far drawn in any case, but in view of the large amount of money available for investment in the country it is obviously ridiculous, as ridiculous as Sir Joseph Ward has described it to be.

LOCAL WAR LOAN. The amateur financiers, who have been urging upon Sir Joseph Ward a local war loan as a means of expressing the Dominion's patriotism and, incidentally, of relieving the banks of their surplus deposits, will be disappointed by the Minister's emphatic pronouncement against their spectacular style of finance. They may obtain some comfort, however, from the reflection that persons better acquainted with the position than they can be warmly support Sir Joseph in his rejection of their proposal. These authorities point out that a war loan of sufficient magnitude to be of any real assistance to the Mother Country inevitably would increase the price of money all round in response to the inexorable law of supply and demand. It would be very fine and large, a splendid advertisement for the Dominion, and even for the Empire, if New Zealand could help the Mother Country on the financial side as well as on the fighting side; but there would be no advantage to anyone—the very re- ' verse indeed—in making a display in the eyes of the world at the coßt of our primary industries, the 6ettlers striving to establish themselves on the land and the trade and commerce of the country. The fact that the Imperial authorities &aye cheerfully confirmed their arrangement to provide all the money the Dominion may require for ■war purposes ought to satisfy the advocates of the local loan on this score, and also induce them to look around for some more practical way of expressing their admirable patriotism. SANE FINANCE. In connection with the proposal to ■raise a local loan it may be as well to mention, in view of what has been said and written on this subject by rAe more fervid patriots, that Neyv Zealand is bearing the cost of all its contributions to the Imperial forces. It is borrowing the money it is obtaining from the Mother Country, not accepting it as a free gift, and every penny it is spending on the national cause will have to come out of its people's pockets. It would be very nice if we could pay our own yvay in hard cash during the war: but yve could do this only by restricting our supplies of men and foodstuffs, and so reducing our value as a factor in the great world struggle. No one who has travelled through New Zealand, and seen the immense amount of immediately reproductive work requiring to be done in order that the country may render its best service to the Empire, can honestly believe that its patriotism would foe adequately expressed by postponing t_s work for an indefinite period and crippling its resources at a time when they ought to be kept at their •highest efficiency. H the Mother Country wanted our financial assistance, the position would be entirely' different. If ever Bhe does, the last shilling, will be as freely at her disposal as the last man.