THE COMPULSORY WAR LOAN

Evening Post, Volume XCIV, Issue 40, 16 August 1917, Page 11

THE COMPULSORY WAR LOAN

to -Tim BDrron,

Sir, —I felt complimented when theMinister for Finance said oh Wednesday : "In the event of the voluntary contributions falling short of the amount; required, I will ask the House for authority. to introduce a system of conipulsory contribution." In the London Times of 13th November, 1900, appeared a letter contributed' by me on "Australasia's Never, Never Policy," from which the following is excerpted:—"Speaking for New ' Zealand, l'esort to thd London market is quite unnecessary. , Half a, million sterling could easily be raised from the well-to-do classes. Cafl it a, tax., The tax could take the form of an enforced loan, bonds bearing 3 per cent, interest, with sinking fund . for 25 or 30 yearo added, being issued therefor. The taxpayer, otherwise bondholder, would notbe inconvenienced, as the bonds would be at once negotiable at par. . Roughly, during 30 years £15,000,000 has been spent on railway construction—£soo,ooo a year. The future rate would be just the same."

It will be seen from thiifcthat I forestalled Sir Joseph Ward by seventeen years. On the 16th a leader in Ths Times, facetiously written, upheld my main contention. The Thunderer regarded me as "Apostolic." I never felt like.that, but now realise I am decidedly patriarchal. I invited the Agents-General to answer my letters. This they did, not forcibly, but in. forcible language. I was so decorated with lingual gems that the opinions they professed to have of me were unmistakably plain. Mr. WV Pember Reeves, for New Zealand, wrote indignantly thus:,--— • "Taking New Zealand as a shocking example, he goes on to indicate how his heaven-born financial reformer ought to set to work. First, borrowing from London might be put a stop to, and the money for colonial public works raised internally by an enforced loan from the wealthier, classes. There is something refreshingly medieval about this; it smacks of the benevolences of the Plantagenets or the methods oi Charles II."

Referring to The Times leader of the preceding day, Mr. Reeves proceeds: "Any ignoramus can be racy, any fanatic can be fervid, but the combination is not all that is wanted when the writer is drawing up. a damnable indictment against the honesty, credit, and standing of industrious, patriotic British communities." . . . ;

From ..Jlr., Reeves's standpoint, Sir Joseph, Ward and I must be equally ridiculous, but the question resolves itself into one of status. Is Sir Joseph Ward to. bo classed amongst the ignoramuses, or am I to be promoted to the level of 'that eminent financier? Mr. Reeves concludes: "I am challenged to say how much of the national debt is reproductive. I unhesitatingly say that nine-tenths of it is, directly or indirectly. This is the security the Mnglish lenders have—a prosperous, intelligent, expanding, young nation, the wealth, honesty, and energy of which form in truth tho safest possible of 'sinking funds."

Mr. Copeland, for New South Wales, wrote I was scurrilous, and took the same line of argument as Mr. ; Reeves. They simply adopted in this matter the lawyer's motto, "No case, abuse the. opposite attorney." My proposal to borrow half a million a year in New. Zealand was argument enough as to my faith in the soundness, of .this colony. . But my opponents ignominiously abandoned their briefs, when they alleged their i-espective countries' wealth was ,a sinking fund. Certainly it was good enough security for the money lent, .but it could not, by any process of reasoning, be construed into, a sinking fund. They ignored the most important, element, the purport of. my. letter, redemption, of.the loans; therefore, they .left me .victor in the field. Anyone reading British War Buclgets will . have observed a sinking fund is provided to redeem the. hundreds of. millions borrowed. . Will New. Zealand follow that example of sound finance?

Of course, Sir Joseph Ward may deem it advisable to leave matters in a state of fusion, until after the.war, but at the settling this .Dominion should place its finances on an honest footing. Such a disturbing . element as. this war is unlikely for decades to come. Look what difficulty there was in floating loans to redeem those falling due.- I do not remember exactly at what rate, but probably as much as, if not more than, the original loan. And all this, because a needy Colonial Treasurer seized the sinking, fund that should,have gone towards extinguishing the loans then, current, and his example was,followed ever afterward, as an excellent principle. I have a hazy impression—l, may have only .dreamt it— that Sir Joseph Ward stated 1, a sinking fund would drain the heart's blood of the community.

A. few years ago Sir Joseph Ward initiated a plan for paying off the Dominion's debt in 75 years. The British public bodies have to provide a sinking fund for, I fancy, thirty years. So that this scheme of Sir, Joseph's will require two and a-half times the British period to mature, not including that in which it should have been liquidated, for, the bulk of the Vogel-Atkinsou loans ought to htive been paid off by now.

. I am on firmer ground' than the Armageddon cranks, at any rate, prophesying the'7s years' redemption scheme will not run its course. Some hard^up Treasurer, wheii the accretion has swollen enough to malte it worth taking, will lay violent hands upon it. But the guarantee? When: iiave guarantees withstood the pressure of.the unscrupulous An Alex ander.'s s%yord has always been found to cut the gordian knot. , But the scheme has done what was intended; it has enhanced Sir Joseph Ward's reputation as a brilliant financier. . .. :

WJiy should not an Imperial guara-n: tee be secured when our war loans are being permanently adjustedl? Britain is,lending tens,'pei'haps hundreds, of millions sterling- to certain States. All we would, require from her is to endorse our.bills^-rgive us the benefit, of her credit. Surely we. are an incomparably better security -than, many of those dubious European States?—vide Messrs. Reeves's and Copeland's panegyrics. The British guarantee ought to prove a great help to flotation in London, and possibly a valuable assistance in fixing the rate, as general!}' Britisli are more favoured than Australasian loans. , Surely Britain should do : something for us? We are fighting her war, in the sense that we had no voice in the molting of it. Of coui'se, we are only doing our duty ;■ bub this adjustment would afford Britain an excellent opportunity for expressing her gratitude by bestowing on us a material favour .which would cost hep nothing., And more important,still; it would constitute a strong link Tor binding Britain and her offspring yet more closely, together, for surely jicr children would appreciate and never forget hpr generosity in assuming tins, great responsibility. —I am, etc.,

Auckland, 10th. August, 1917.