Evening Post THURSDAY, JULY 6, 1939. A CASE UNANSWERED

Evening Post, Volume CXXVIII, Issue 5, 6 July 1939, Page 8

Evening Post THURSDAY, JULY 6, 1939. A CASE UNANSWERED

The indictment of the Government's policy presented in the Opposition amendment to the Address in Reply was a searching exposure of the results of the spending-for-prosperity plan. It was an exposure, too, of the concealment practised by the Labour Party in October when it assured the electors that the finances were sound, prosperity undiminished, and everything in order for a further advance; —if only Labour were returned to power. Now the picture is completely changed. Extraordinary and emergency measures have had to be adopted, trade is disorganised by the depletion of sterling funds, hasty steps are being taken to foster secondary industries, guaranteed farmers are being asked to waive their just claims, there has been a disquieting fall in primary production, and a Commission has just been appointed to investigate the acknowledged difficulties of another branch of the farming industry.

This is the case that the Government has to answer —a case not built up by cleverness in debate or juggling with figures, but revealed in well-known facts. The Prime Minister failed to answer it last night. With his customary wit and agility he endeavoured to avoid the awkward issues. He spoke of the Leader of the Opposition "doing a Highland fling from one mudhole to another"; but this was nothing to the way in which he himself danced lightly over the boggy places and then claimed that it was all solid ground. It was evident that the dance, or, to drop the metaphor, die speech, was an exhibition performance. It was not meant or intended to answer the Opposition facts and arguments, but to appeal to broadcast listeners and keep up the illusion created in October. But with all the cleverness displayed we doubt if this was achieved. The Prime Minister was overbold in some of bis assertions. "There is nothing wrong with the country's credit," he declared. Then why has the Minister of Finance been sent so urgently to London? The £17,000,000 loan does not mature till January 1,1940, and if everything were satisfactory Mr. Nash could have been here for the opening of the session and the presentation of the Budget before leaving—if he had to leave at all. Why has sterling control been introduced and why ihave imports Been restricted? Why iis the Government thinking of borrowing overseas (which it has condemned) and why did it find it necessary to pay a rate equalling 4| per cent, for a local loan when | formerly it thought 3 and 3| per cent. I sufficient?

The Prime Minister tried to make it appear that the sterling crisis was due principally to the export of capital "just about election time." "I do not know whether that was political," he said, "but it looks dangerously like it to me." But in making this political counter-charge he ignored completely the evidence of facts and the admissions of his own colleague, the Minister of Finance. New Zealand did not lose the bulk of its sterling reserves in a month or two. The process was gradual at the start and attention was drawn to it in ample time for the Government to arrest the flight if it had wished to do so. There was a decline of approximately £17,500,000 in overseas funds between October, 1936, and the end of March, 1938. The Leader of the Opposition drew attention to this decline while it was in progress in 1937, and the Minister of Finance then accounted for it as due to quite normal causes. "Unpatriotic exporters of capital" were not blamed.

The process of depletion went on steadily and in June, 1938, when there was still time to remedy the position, the Reserve Bank called attention to the danger. Now the Prime Minister would create the impression that the crisis cqme suddenly and was political in origin. Nothing of the kind. The loss of sterling was certainly accelerated in the last months, but why? Wholly because people saw the funds disappearing, a crisis approaching, and the Government obstinately declining to admit that anything was wrong. Confidence was lost, and, when confidence goes,

funds cannot be held. If there was any political element in the crisis it was the fault of the Government, firstly, in pursuing a policy which exhausted ample reserves and, secondly, in hesitating to take corrective steps until the position forced action. Its hesitation had a political basis. It had claimed success for its policy; to admit failure, or even partial failure, on the eve of a General Election, would have diminished its prospects of election success. So it said nothing of trouble ahead, concealed the ominous facts, and claimed that prospects were brighter than ever. It succeeded with the electors. A political victory was bought at the price of a financial and trade crisis. But the Government should not think it can repeat the performance. People are beginning to note the difference between what was told to them by the Government in October and what they see for themselves now. And when the Prime Minister declares "there is nothing wrong with the country's credit" and then blames the Opposition, the Press, and anyone else who is handy for what is quite obviously wrong, he is counting too much on the credulity and simplicity of his hearers. •