SACRIFICES.

Auckland Star, Volume LXXI, Issue 152, 28 June 1940, Page 9

SACRIFICES.

"ALL MUST SHARE."

hard work necessary.

bank credit limitations.

(By Telegraph.—Parliamentary Reporter.)

WELLINGTON, this <lav,

In dealing with the diversion of productive effort to war purposes the Minister of Finance, Mr. Nash, in presenting the Budget, said it was important that normal economic activity in the Dominion should be kept going as much as possible firstly to provide the sinews of war, and secondly to maintain the civilian population on as high a standard as was practicable. He also pointed out tha/t, except to the extent that it could be offset by additional production through hard work and better organisation, the diversion of effort to war needs must be at the expense of civilian consumption or goods and services. In other words, all must share in varying degree in the sacrifices.

J Continung, Mr. Nash said the costs of 1 1 e war, apart from borrowing overseas, j must come from current production. The | obvious method of finance was taxation, and there was no doubt that we should pay as we go for the war to the limit of our capacity. The limit was fixed by the necessity of keeping the economic system intact. I Reserve Bank Credit. R J,y. ,U ' hil '?. °" tht : utilisation of Reserve ank credit, Mr. Nash said that, as the [war progressed and its costs continued to mount, the Government might be forced to utilise this credit to some extent. Bank credit was a normal and sound method of financing additional production, but to issue additional money to purchase for war purposes a portion of an existing volume of proauction must mean leaving civilian consumers with the present volume of purchasing power to buy the much smaller volume of goods that remained available for them. That involved progressive inflation, and experience in other countries had shown that the disastrous effects which followed fell most severely uj>on the rank and file of the people. Except to the extent by which production was expanded we must inevitably consume or use less luxury products if we were to provide all that was required for a maximum war effort. It was infinitely better for everybody that the measure of the sacrifice required from each and every one to carry on the war should be made out of current income either by way of j taxation or by savings.

Part of our requirements was met directly from production, and the balance by an exchange of poods with other countries, mostly with Great Britain. We must think in terms of goods and services and not in terms of money. In the light of these principles the Government's policy for financing the national effort on the war front and the "home front" might be concisely stated as tax to the economic limit for war purposes and to borrow for essential productive works and for any balance of war requirements.