NEW ZEALAND’S CREDIT HIGH.

Evening Star, Issue 22069, 1 July 1935, Page 8

NEW ZEALAND’S CREDIT HIGH.

It should be gratifying to the people of this dominion to note the favourable reception given to the loan conversion proposals in London. Fortunately, when the financial blizzard struck New Zealand the Coalition Government acted with decision and promptitude. By drastic economies and taxation, in the face of considerable criticism, it averted the gravest financial embarrassment as the result of the slump in the returns from the export of our primary products. In this instance the political leaders followed the example of the British Government in taking the harder way, and the beneficial results are now apparent. There is no royal road in these matters, and it is fortunate that our Ministers, avoiding unsound and fantastic theories, took the safe course. The chorus of appreciation from the British Press is an endorsement of New Zealand’s financial policy and a tribute to its high standing .in the City. As indicated in the cable message on Saturday, the total amount of the loan affected was £lO,135,000, but of this amount £2,135,000 has been paid off in cash, and the balance of £8,000,000, at 3 per cent, at £9B 10s is offered on the London market. This operation means that a saving of roughly 2 per cent, will be made on the loan, and two millions will go L to reducing the public debt. Mr Coates, as Minister of Finance, is naturally pleased with the prospects, remarking that “ New Zealand’s credit standing in London had enabled her to borrow at the lowest rates of the present century.”

J There was adverse comment in some quarters in the dominion when it was announced that both Mr Forbes and Mr Coates were going to Britain. The wisdom of their decision is now obvious. It was certainly advisable, in the circumstances, that the Finance Minister should be on the spot personally to conduct the loan operations. As Mr Downie Stewart pointed out in his interview on Saturday, when, he was in London in 1932 the market was closed to enable Britain to put through her huge conversion loan. The restrictions have been gradually relaxed, and in the expanding demand for loan money the presence of New Zealand’s Finance Minister, at the moment, was, to say the least, opportune. The presence of both Ministers was further rendered necessary, as events have proved, by the protracted meat negotiations, ip which the powerful Australian delegation has insistently pressed the claims of the Commonwealth in a direction that is not in the interests of New Zealand. In this connection the ‘ Financial News ’ in commenting on the loan proposals, gives a crumb of comfort to the dominion. It points out that New Zealand relies for its prosperity almost entirely on the export of agricultural products to Britain, which provide the money from which the British bondholder is paid, and goes on to say that there is no sign of so drastic a change in Britain’s agricultural policy as to endanger the high standing which the dominion has always enjoyed in London. Britain, Australia, South Africa, and New Zealand are trying to compose diverging interests, and the negotiations are greatly complicated by the unique position of one non-Em-pire country—the Argentine. Day by day a solution has been looked for. It cannot bo delayed much longer, and it is to be Imped that the suggestions of the London financial journal are borne out. So far as the loan proposal is concerned, New Zealand has every reason to be pleased with the way in which it. has txjen x'eceived on the London market.