WAR FINANCE

Auckland Star, Volume LXXII, Issue 166, 16 July 1941, Page 4

WAR FINANCE

MEMBER'S EXPLANATION The Government's methods of financing the war were dealt with at some length by Mr. C. W. Boswell, M.P., speaking in support of the candidature of Mrs. M. M. Dreaver for the Waitemata seat, at Milford last night. Mr. Boswell said the war was being paid for in three ways: By borrowing, by taxation and by use of the Reserve Bank.

Before the outbreak of war, he said, the Government had borrowed no money overseas. Internal loans, some on a no interest basis, others compulsory, had been raised in the Dominion, and these also helped to prevent inflation by withdrawing money from circulation in the country. Prices in New Zealand had risen less than anywhere else in the world, this being due to the internal borrowing as well as the Price Tribunal.

Taxation had been used because the Government believed that the war had to be paid out of the production of to-day. The policy of conscription of wealth had been followed, and trading banks had been allowed to make no profit in New Zealand this year.

The third source of war finance was the Reserve Bank, which was used particularly to pay for industrial work in the country. W'herever raw materials and unemployed men were available the Government used the Reserve Bank to bring them together.