SELF-RELIANCE IN LOANS

Evening Post, Volume CXX, Issue 115, 11 November 1935, Page 8

SELF-RELIANCE IN LOANS

Sound reasons were adduced by Mr. Toogood, National Government candidate for Wellington South, for die adoption of a self-reliant borrowing policy. He pointed out that the barriers being raised against export trade would make it more difficult for us to meet interest charges or to pay for goods purchased from abroad. There is always a temptation, under such circumstances, that we may endeavour to make good the deficiency in overseas purchasing power by raising loans. But such a course involves further though gradual reduction of our power to buy. The more we have to send away for interest the less we have for current purchases. There are other reasons operating at present to discourage overseas borrowing. English interest rates are in sterling, and even the last favourable conversion to 3 per cent, with an issue price of £98 10s costs us £3 15s in New Zealand currency. Moreover, loans add to our sterling balances overseas, and these balances in the hands of the Reserve Bank and the trading banks are still of embarrassing size, though £2,135,800 (at an exchange cost of £523,270) has been used Tn repayment of debt. Because the Government has a contingent liability for the Reserve Bank sterling funds it is unlikely to add to these holdings by borrowing. But circumstances may change if internal borrowing threatens to force up domestic rates of interest.