£10,000,000 LOAN PLAN

Evening Post, Volume CXV, Issue 132, 7 June 1933, Page 10

£10,000,000 LOAN PLAN

ME. COATES'S REPLY

PROPOSALS EXAMINED

THE DANGER OF INFLATION

(By Telegraph.) (Special to the "Evening Post") AUCKLAND, June 6. ■ Several important points arising out of the plan submitted by the deputation urging the raising of the £.10,000,000 loan were discussed by the Acting-Prime Minister (the Et. Hori. J. G. Coates) iv an interview prior to his departure for Wellington tonight. He said he had taken a subsequent opportunity to examine more closely the proposals which had been placed before him only a t'civ-hours before the • deputation waited on him. He desired to express his appreciation of the thought given to the problem by the members of the deputation, and his further comments were not intended so much as a criticism of the scheme as points which anust be borne in mind in ■considering its practical effects. "The whole proposal is apparently a local adaptation of Mr. J. M. Keynes's 'means to prosperity' programme," said Mr. Coates. "It has little application in New Zealand, which is such a large exporting country that our economic position is bound up with primary ; prices at Home. When they lift, our difficulties will be solved, and until they do lift,-to incur further liabilities would only be adding to our troubles unless the deputation's proposals are connected with self-support-ing projects. , ARTIFICIAL PROSPERITY. "If this £10,000,000 were secured and used as suggested," said Mr. Coates, "the prohable result would be a burst of artificial prosperity, and afterwards' we would be worse off. All sxperts advise that steady progress on sound lines is what is wanted, and that a sudden burst, followed by a relapse, would only retard progress by destroying what confidence- is left. "Lack of confidence is accentuating the present difficulties. The Government has already embarked on a comprehensive policy, on a sound basis, to bring down the market rates of interest, and this proposal would largely undo that work. The reference to a board of currency is not understood, but if it is intended to mean note issues, that is straight-out inflation in its worst form. It'would be hard to stop, and the country might • easily go the way Germany went. "Theldeputation proposes an expenditure of £2,500,000 on unemployment. We want to relieve distress as much as possible, but to make- unemployment pay too high would only increase the numbers engaged in work which is Jess productive than what private enterprise' could provide. Unemployment finance would break down under its own weight. "Then it is proposed to advance £1,500,000 to local -bodies for the prosecution of services and Utilities and for general purposes. In that connection it is generally held that local bodies have borrowed too much already. SUBSIDY ON PRIMARY .PRODUCE. .('Regarding-the sum of £3,500,000 for subsidies on primary products, producers are already receiving this through the exchange adjustment. A subsidy of one,- penny a pound would cost £6,500,000. As a matter of fact, Bradford cablegrams this morning show that wool is now on the up-grade. ■; "The deputation also -proposes to ;spend £1,000.000 on roads and bridges. I would point out that the Public Works Department already has a loan programme of £3,500,000 on hand, and works to be done under that vote will all be of a selective nature. In connection with the proposal to spend £500,000 in the exploitation of goldmining schemes,'it must be remembered that gold is now double the 1929 price." ' ! .-"■■.