NEW ZEALAND INTERNAL LOAN

Press, Volume LXXIV, Issue 22593, 24 December 1938, Page 6

NEW ZEALAND INTERNAL LOAN

TO THE EDITOR Of THE PRESS Sir, —Mr Horace E. Herring, in your issue of December 22, shows a misconception regarding interest which seems to be shared by several of your correspondents. Money is not borrowed merely for the purpose of carrying it about for a time and then returning it to the lender. When money is borrowed it is for the purpose of acquiring some useful or wealth-producing article. I may lend a neighbouring farmer agricultural implements or stud sheep or I may lend him money wherewith to acquire these. In both cases I cannot at the same time derive any benefit from the use of what I lend, and if my neighbour derives any benefit from its use he is morally bound to share some of that benefit with me. The appeal to Scripture which your correspondent makes is fallacious. The small percentages of modern interest are unknown to the native Eastern money-lender and were probably unknown to his predecessors in Bible times. Often enough half as much again as the original loan was demanded even for a short-term loan. Money-lenders of this rapacious type are still known in. the West, but their activities have aroused so much indignation that the law has had to interfere. There is such a thing as just interest, and it is as well to recognise this while attacking certain banking methods which are unnoubtedly open to criticism. When we come to deal with government borrowing it has to be admitted that several new factors enter in. A government may require money for objects which. do not in themselves yield a direct monetary profit, though they may add to the material wellbeing of the country, and it is here that care has to be exercised, both in the manner of raising the money and ini its expenditure. Even admitting that the only possibility was to borrow from abroad, previous governments in New Zealand have neglected to safeguard the country from the dangers attending this procedure. The result has been a mushroom growth of land speculators, inflated land values necessitating still further borowing, and the fixing of a permanent yoke of debt on our shoulders.

The reason for this neglect, of course, is not far to seek —numberless legislators, publicity owners, and - others all had sections of one kind or another which they hoped to dispose of at an enhanced value. Anyone suggesting a check to this disastrous policy was laughed at as a crank or hounded out of public life. Now the farmer, who was one of the chief opponents of any remedial legislation, is groaning under a burden from which he cannot escape. The least that can be done now is to see that it is not further increased.— Yours, etc., ANALYST. December 23, 1938. to the MDrroa or the press. Sir, —I deny that I contradicted myself in the letters referred to by “T.V.W.” If different moves are suggested, for possible different circumstances. contradiction does not inevitably follow. If the sheepfarmers are not .enjoying a period of plenty since their fall, why has their union president not approached the Government? They are men of business and the inevitable answer is that they do not want their business looked into. Certainly the increase in price of butter sold in New Zealand has been at the expense of the other sections of the community. But the extra money given by the guaranteed price for butter sold overseas has been drawn from the Reserve Bank. The sheepfarmer does not fully guarantee the dairy farmer —only in so far as he consumes butter. With the guaranteed price of wheat the rest of the community guarantees and supports the wheatfarmers—a very, bad method. Probably that is why Australian financiers admire the plan. The worker does not, through the customs, salat tax and wage tax, guarantee the sheepfarmer nor the dairyfarmer nor his own wages. The worker just lives among them, on uneven terms no doubt, but he still lives among them. Exports and the Reserve Bank guarantee them all and carry them all. They are all carried. Seeing there has been such a heavy call on the sterling funds it will be for the good of the country if the farmers can play their part,without further aid. The social security scheme will not add much to the national costs. It will be more In the nature of a readjustment of that branch of costs. A marking time period for another year might be all to the good. The Government could profitably turn its energy into seeing that all its legislation is administered in the spirit of the laws and not evaded. —Yours, etc., KAYE HOE. December as. 193 a