DOMINION'S WEALTH.

Auckland Star, Volume LXI, Issue 161, 10 July 1930, Page 22

DOMINION'S WEALTH.

COUNTRY GOING TO THE BAD. LIVING BEYOND OUR MEANS. POSITION REVIEWED BY AN AUTHORITY. (By CROESUS.'? Mr. George Sliirtcliffe's valuable review of the Dominion's overseas trading and financing, published on June 2, will have been read and studied with the deepest public interest, but it would have been still more valuable if he had shown more clearly the movements to which he takes exception, and also more definitely the practical means by which the public -would allow these movements to be diverted 'or curtailed. Poseibly of most value to the community as a whole is his plea for economy, public and private, thus heartily supporting the Prime Minister's statement. It is quite a treat to have this emphasised, instead of the usual call for optimism, for the latter cannot possibly do any good, as it only makes people spend too much, like Australia did. The more optimism there is, the more buying there is—with cash in hand, if there is any, or by mortgaging next year's income for timepayments if funds are exhausted—and the more buying there is, the more imports will rise, thus bringing about the result which is deplored by every economist, financier, politican and newspaper in the Dominion. Meeting Overseas Obligations. It seems quite reasonable to state that the ■ overseas annual obligations of £9,000,000 have been , met during the past nine years by an average excess of £4,000,000 in exports over imports, together with % fresh borrowings of £6,000,000 a year. This leaves a surplus of credits in Loudon averaging £1,000,000 a year,- and, as it is known that the present surplus in London is actually less than it was nine ycais ago, we should know wheie tins £9,000,000 has gone, unless we assume it has been invested in Australia. In his necessarily brief reference to the £6,000,000 borrowed every year, which lie suggests was used to meet interest obligations in London, Mr. bhirtcliffo is not very clear in disci iminalJing between cause and effect. That is to say, were the loans raised to make good the shortage of exports over imports from what the surplus would have been if it had met wholly our overseas obligations, or have the loans so inflated imports as to create that very shortage? If we analyse the position it would appear that the former is merely the effect, whereas the latter is the real cause, and as we have it in our power to borcow or not, just as we decide, the cause is in our own hands. ■ : -Mr. Sliirtcliffe's " suggestion, however, that "the annual deficit must be coming out of the accumulated wealth of the Dominion" seemu to imply that the real object of the loan is to make good the shortage of exports over imports. . This invites'a further explanation from him, seeing that the accumulated wealth of the Dominion is vastly greater than it. was nine; years ago, and this makes it hard to follow his suggestion that we have been going to the bad. What is Done with Loans? Everyone knows that when we borrow in. London it does not. come, here in cash. It must either come out in goods, stay in London, or be invested elsewhere. Very well. The people of New Zealand are not satisfied that the Government should merely expend ordinary taxation revenue for developing the country and providing additional services: they want more, and through their representatives, in Parliament or on local bodies, they authorise loans in London, in addition to all the revenue. This £6,000,000 was therefore borrowed every year, and there is no question that if it has not been borrowed the exports would have exceeded the imports by £9,000,000 a year—instead ,of only £4,000,000 —for the simple reason that .there "would not have been the funds in London to pay for the extra £5,000,000 worth, and even British shippers will not send goods to New Zealand unless the banks will take up their drafts. Borrowing for Public Utilities. We therefore arrive at this, that the only reason why our imports have approximated annually within £4,000,000 of our exports, instead of within £9,1)00,000, is because we have borrowed, and'although in actual practice the loans have been utilised to meet interest, in order to save two bank exchanges, the raising of the loans has enabled goods to come here which would not have conic otherwise. " It is not material to#the question under discussion how they came, but so far as the Government and local bodies arc concerned, who did the borrowing, tliey came in the form of hydro-electrit?" machinery and reticulation, telephones and automatic exchanges, railway engines and machinery and materials for constructing engines, carriages, trucks, railway lines and.tram lines, tram-cars, railway stations, post offices, hospitals and other public wharves, bridges, concrcie roads, bituminous roads, drainage and water pipes, and all the hundred and one improvements which represent the extra indebtedness. We have plenty to show for the loans, if they have been judiciously spent. Some facilities- are reproductive, some partly eo, and some not at all, but the point is that the' public demanded that they should be provided out of loans, and not ' out of extra taxes. All shades of public opinion seem to be dead,against more taxation, so how can these services be provided unless we borrpw, and lio.w can we borrow with out increasing the imports? The question therefore seems to be whether New Zealand should suddenly stop'borrowing in London, which would very quickly reduce imports and stop the country from "going to the bad to the extent of £5,000,000 a. year," a=s Mr. Shirtcliffe suggests that it has the past nine years—a stoppage which would dislocate the whole system of developmental work now in progress— or whether all that is desirable to restor-j. financial equilibrium cannot he accomplished by, natural means, as it has always been done in the past. That is probably, where his further exposition 1 would be of most value.