FINANCE MYSTERY

Dominion, Volume 22, Issue 75, 21 December 1928, Page 8

FINANCE MYSTERY

DETAILS STILL A SECRET SIR JOSEPH WARD MAKES A STATEMENT DECISION CABLED TO ENGLAND

The position arising out _of the discovery of the “very important London transaction, which caused a modification of the Government’s financial proposals has been reviewed by tlie Prime Minister (Kt. Hon. Sir Joseph Ward), who has cabled Home his decision as to the best course to be pursued.

In the course of a statement on the matter yesterday, the Prime Minister stated definitely that the proposals he found left over awaiting his decision on assuming office, whichever way they might have been decided by the previous Government or himself, in no way reflected on the high credit of New Zealand, or its powers to borrow in London or to keep its engagements. The negotiations, which were initiated from the London end, came up probably at an inopportune time for easy handling, before the general election. A Review Necessary. “The transactions were under confidential seal,” said Sir Joseph M T ard, “and I was not myself aware of the nature of these matters until December 13, when I took over office. It is obvious that the proposals in no way affected the country’s credit. They were made before it was known what Government would be in power. It has been hinted that the conversion of the 1929 maturities was the difficulty, but while arising out of this, the proposals before me go much further, and involve a marked departure from what has been the usual course in London finance, and they did have an important bearing, in my own opinion, on the policy which the country endorsed at the election. As soon as I had realised this I had to give very serious consideration to a review of the whole position, so as to decide upon the best course to pursue in the interests of the country. This I have now been able to clear up, and have cabled London my decision, the result of which will become public when the whole transaction is completed. At present details obviously 1 cannot be discussed.” The Seventy Millions. “As there may have been some mis-f understanding regarding my policy of;) borrowing as enunciated throughout the country, particularly in reference to the seventy millions,” the Prime Minister added, “I wish to make it clear that at no time have I suggested that seventy millions was to be borrowed in one year. A similar impression may have been conveyed in England. Obviously such a proposal was out of the question, as it would so disturb the country, and no responsible man would make such a suggestion. What I proposed was expending over a period of eight to ten years an amount up to £60,000,000 by loan to settlers, an average of £6,000,000 to £8,000,000 a year, and the completion of five lines of trunk railway connections, on which up to £10,000,000 should be expended during .the: next three or four years. The Public Works estimate of the whole of these railways is £7,500,000. I added the extra amount for possible .contingencies and cost of rolling stock. The £60,000,000 was for State advances to settlers and primary producers, and

for promoting small settlement, upon proper valuations being obtained.

No New System. . “This is no new system,” Sir'Joseph Ward said. “It was put Into operation by me thirty-four years ago, and already over £40,000,000 has been advanced in this way, the profit on which at present stands at £1,500,000, and remains in the form of a reserve fund, in addition to which there is a sinking fund. The Department lias been financially successful from the beginning. Under the whole of the proposals for the two purposes abovenamed there is no taxation required, as the cost of the money is paid entirely by the settlers who boiwow, and by the working railways when they are completed as a productive asset. In addition to this the whole borrowing proposals proposed by me do not amount per annum to the average aniiunt the country has borrowed during the last three years. “There has been so much misrepresentation on the matter,” said the Prime Minister, in conclusion, “that I feel that it is due to the British investors who have always treated this country well that they should not assume. without proper information that there is a policy of extravagance inaugurated, and I wish to state definitely that there is no intention on the part of the Ward Government to abuse either its powers or its credit.”