PAYING FOR THE WAR

Dominion, Volume 34, Issue 157, 29 March 1941, Page 13

PAYING FOR THE WAR

Review Of Methods MOBILIZING ALL RESOURCES Address By President Of Commerce Chamber Methods of financing New Zealand’s war effort were reviewed by the president of the Wellington Chamber of Commerce, Mr. R. H. Nimmo, at the annual dinner of the chamber, held in the Empire Hotel last night. The job was so huge that it virtually involved mobilizing all the country’s resources, he said. “In total -warfare we must go beyond even equality of sacrifice; hothing short of sacrifice to the utmost of our capacity will bring about the speedy victory and recovery for which we all so earnestly pray,” he said. ' It had been suggested that the war should be paid .for from revenue Figures recently disclosed by the prime Minister, however, showed this to be impossible. The war had cost for the first 18 months no less than £40,000,000; for the same period during the last war the cost was only £8,000,000. Considering that there were more men available than during the last war, and that presumably more would be sent overseas, these figures would be steadily and rather alarmingly increased. United War Effort.

“I understand that we are getting some assistance from the British Gov eminent in maintaining our forces overseas, but it is incumbent on us, as part of the united war effort, to pay as much as we can from our own resources, which means out of our own sterling funds,” said Mr. Nimmo. “To the extent that our war costs can be met out of current income by taxation it is all to the good, for that part of it is over and done with, but taxation must not be carried to the point of crippling industry for, in many directions, money is wanted for expansion of industries to meet wai needs. ‘‘Prosecution of war makes excep tionally heavy demands on the national finances, and sufficient revenue can seldom be obtained by taxation alone, however rigorously imposed. The State is, therefore, driven, as Great Britain is driven today, to resort to borrowing. x “Borrowing in wartime by absorbing the surplus funds in the community restricts the buying power of the public, and thereby decreases the deli mand for commodities which the nation can only supply in limited quan titles, reduces the tendencies to inflation, keeps the value of goods within reasonable compass, and enables the nation’s factories and industries to be more easily controlled for production of essential war requirements. “I am convinced that internal loans secured for a long tenure and for war purposes will entail sacrifices on the part of those who contribute, as history has demonstrated over and over

again that war loans are never repaid in the value of the currency at the time the-loans were negotiated but, instead, by a depreciated currency. The loss falls on the contributor, and that is an added financial contribution to the war effort. Import Control. “The ability of the industrial and commercial community to pay taxa tion and to make war contributions is obviously dependent to a great extent on th,e importation of goods from overseas, specially raw material. Imports are always governed by the volume of exports, In 1940 our exports were valued at £73,700,000, an increase of £15,300,000 over the aggregate for the preceding year. “With such a satisfactory position disclosed, and with due regard to all the Government’s obligations, I would suggest that there will remain sufficient margin to justify the Minister of Finance being more generous in his

allocation of import licences for the ensuing year. But, while I express this hope, I cannot close my eyes to the grave position with which the country appears to be confronted in respect to meat. 'When this is clarified and the Government policy disclosed, we will be in a much better position to judge the situation. Voluntary Savings.

“Finally, there are voluntary savings from current income, which are important from several angles. A few shillings a week from each of the mass of the people can produce huge sums as is- strikingly Illustrated in Great Britain. National savings also help to keep spending in line with the reduced volume of goods available for civilian consumption. This is very important in the maintenance of economic stability, for if the volume of spending is maintained while the volume of good's is lower the result is inflation, with all the evils that follow.”