TOO MUCH BORROWING.

Auckland Star, Volume LXII, Issue 138, 13 June 1931, Page 11

TOO MUCH BORROWING.

IMPORT AND EXPORT VALUES. GOLD-MINING REVIVAL NEEDED. (By Telegraph.—Own Correspondent.) DUNEDIN, this day. "We can only come into our own again when importations come down to valuer more in keeping with those our products are now realising, and this will take some time." This statement was made yesterday by Mr. W. E. Reynolds in addressing shareholders at tlie annual meeting of the Perpetual Tniiste&s Estate and Agency Company of New Zealand. Since 1924, declared Mr. Reynolds, NewZealand had been borrowing excessively at interest rates consistent with inflated currency. Now, when called upon to meet those interest payments under a deflated currency, the people had to suffer accordingly. <

"One important inference very clearly emphasised from the position made manifest, to-day is that paper money can never legitimately be resorted to as a remedy, excepting in so far as it is supported by gold, for the simple reason that it contravenes economic law. Cold costs, in labour and outgoings, about £4 an ounce to win, and is for convenience standardised at this price, whereas paper money cost>s practically nothing. Further, it might be noticed that during the war and thereafter the production of gold declined principally because of the inflated cost, both of labour and material, required in connection with winning it, and that decline was, he thought, much to be deplored. It was always to be remembered that gold was the only one product in the world upon which a definite price was fixed. Therefore, as its standard value never altered, products on the average move up and down in accordance with the quantity of gold available. When prices of products were high the winnjng of gokl was not always profitable, and because the reverse applied already signs of o

Further, it might be noticed that during the war and thereafter the production of gold declined principally because of the inflated cost, both of labour and material, required in connection with winning it, and that decline was, he thought, much to be deplored. It was always to be remembered that gold was the only one product in the world upon which a definite price was fixed. Therefore, as its standard value never altered, products on the average move up and down in accordance with the quantity of gold available. When prices of products were high the winnjng of gold was not always profitable, and because the reverse applied already signs of a gold-mining revival in New Zealand were to be scon, rcrsonally he would be pleased to see the Government doing much more than had yet been done in that direction.

"Bevond advocating this and also a cessation of further' borrowing from sources outside the Dominion," Mr. Reynolds added, "I have no otlier suggestions to make. It is for us, by expressions of hope and confidence, to contribute our share to that feeling of security which will hasten the awaited improvement in trade."