"RAISING THE WIND."

Auckland Star, Volume XLVII, Issue 66, 17 March 1916, Page 2

"RAISING THE WIND."

WAR LOANS FOB WOBKERS. COMPULSION* AXD LOTTERIES BANNED. (From Our Speclil Correspondents LONDON, February 3. So far as its appeal to the wealthy and the middle-clasa investor wae concerned, the last British war loan was an unqualified success, but the working classes turned a deaf ear to Mr. McKenna's appeals to them to save their extra earnings and lend the money to the Government. Although in monitions areas the amount of State money paid out in wages left all precedents miles behind, only a very insignificant sum .was lent back to the State under the system of of vouchers and £5 bonds set in operation through tine Post Office. Mr. JfcKenna recognised that the system had failed, and caef about for another which might have more success. He accordingly appointed a strong Departmental Committee to examine a number of propoeab for coaxing the workers to inve3t in war loans, and this committee's report has just been published. An interim report, recoaunending the removal (for the period of the waT and cis months afterwards) oi the restrictions on Savings Bank deposits, and the issue of Exchequer Bonde at the post offices in amounts as low as £5, was mack , late in December, and hae already been acted upon by the Government, but it does not appear to have produced the results hoped for. XO COMPULSORY LOANS. The committee had two suggestions before it which it does not recommend. One wag for a compulsory loan. So far as the working classes are concerned, this would have to take the form of a deduction from waged, and the only simple machinery would be one by which a certain percentage of the wage (or of the amount by which it exceeded a fixed minimum) was required to be paid in war loan vouchers. If these vouchers were legal tender they would, the committee argue, drive the existing currency notes out of circulation, deprive the Government of the advantage of the existing non-interest-bearing currency debt of about 70 millions, and expose us to all the mischief of an evergTowing issue of inconvertible paper. If they were not legal tender, but negor tiablo, they "would probably- circulate, at sucha discount aa "would very materially prejudice the Government's borrowing power. If finally they were nonnegotiaWe. the immediate effects of the levy would be indistinguishable from those of an income tax, and co many adjustments would be needed to meet the circumstances of individuals that any 6dheme of percentage payment of wages in vouchers would be administratively impracticable. For thcee reasons the committee decisively reject the suggestion of a compulsory loan. LOTTERY LOANS. The other rejected suggestion was one which found favour in the eyes of many people when it was put forward by certain neiepapttsl a-'-fcjrißionthi.asa.-.'lt: was for the issue of "bonus '-• '■bond*" , Under the echeme outlined the investor would receive a rare of interest lower than that attaching to war loans issued in the ordinary way, and trie difference between it and the maTket rate would be accumulated and awarded in the form of prizes to depositors chosen by annual drawings. Big lottery prizes would be thus offered as a bait zo the investor, and even if he did not win one, his capital would be secure, and he would receive a rate of intercut equal to pre-war st.xiulardt. The committee "Were sharply divided here between those who thought the lottery likely to prove an unrivalled bait and those who objected to any kind of lottery on principle. The system is, of course, no novelty; it hae long been employed with great success on the Continent, where many of the largest municipalities raise most of their loans in this way. To the ordinary man there docs not seem to be anything inherently vicioua in fhe lottery , loanprojects, and, if other methods fair to coax the."workers to lend the State their extra earnings, it is to be hoped that the "•bonus bond" echeme will 'be given a trial. Those who are in a position to know the miwes best are quite convinced that the only way of coaxing any considerable loan from the -workers is by appealing to the chance-loving instincts of out population. Their belief seems amply justified by the huge emu of money received every -week by bookmakers, and by the journals running competitions of various kinds. A COMPOUND INTEREST LOAN. Having "turned down" the compulsory loan suggestion and shelved the lottery loan echeme, the committee proceed to recommend an offer oi a five per cent compound interest investment for five years, absolutely free of income tax, to all persons with Jn» than £300 income. The depositor pays 15/6, and at the end of five years receives £1. He may at any time claim hie 15/6 back, but he gets no interest for 12 months, and then only 3d; but after that Id ie added for each subsequent montfh. Since hie principal is ac readily repaid at any time as if it -were in the Poet Office Savings Bank, while in less than IS months he has got more than the Savings Bank interest, the investment ought to appeal to anybody who understands it. It is to be feared, however, that the majority of the people to «horn the- Government desires to appeal -will not jump at the chance of a pound for 15/6 after five years. In any event, the success of thki echeme. miiet- depend very largely tipon the degree , of success attained "by the other main -propoeal of the «ommittee. They propose to 'set up all over the country a network of collecting agencies and investment societies. These agencies will act merely as conduit-pipes,"col-lecting the individual's money for investment on the Government's terms. The investment societies will invest with the Government, and make their own terms with the individual. Certain advantages .will be given to them, but they will be subject to a certain control by being affiliated to a central committee of experte appointed by the Government. Another committee is recommended for propagandist purpoeca. Such ie, in brief, the scheme by whfch it is hoped to persuade the workers of Great Britain to assist the Government in financing the war. Whether it will achieve any great measure of. success is' open to doubts, and those w*o know the working classes most intimately are most sceptical ac to the resulte that will be obtained. .Men who have had the most intimate association with the classes the Government is en anxious to coax into thrifty habits co that it may borrow from them are practically unanimously in favour of the lottery loan echeme as against *ny other proposal yet put forward. .. ~-•*■ ;