OVERSEA LOANS.

Evening Star, Issue 22383, 6 July 1936, Page 8

OVERSEA LOANS.

Mk Nash’s London statement concerning oversea loans was well calculated to disperse the undue apprehensions among British holders of New Zealand bonds that had been caused by Mr Savage’s pronouncement, and it is satisfactory that it has had that effect. Mr Nash has emphasised that “ nothing in the nature of either default or repudiation is contemplated. New Zealand has and always will live np to its commitments.” Mr .Savage has also insisted that “ it is not the intention of the New Zealand Government to attempt to take undue advantage of any section of the British people.” The seductiveness of picturesque language surely misled the ‘ Daily Chronicle ’ as much as New Zealand’s Prime Minister in his fix-st statement, when it said that his suggestion of an adjustment of interest rates had “ shocked the City to its imperialistic core.” The suspension o*f the debt payments to America, on what most Englishmen conceived to be sufficient grounds, cannot be yet forgotten. In truth, there have been too many examples of the kind. There is a case for sympathy with New Zealand’s position in the fact that, measured in exports, this country is paying double to-day what it was paying when the loans were raised. When the matter is looked at, however, from both points of view it is to bo feared that Mr Nash must meet difficulties in persuading British bondholders of the reasonableness of a case that might seem clear enough viewed from only one side. Mi- Savage’s argument of obligations in New Zealand into which the Government has entered as a reason for his proposal is not likely 'to appeal to them very much. That argument might too easily be expanded to read as follows:—New Zealand has always prided itself on maintaining a standard of life for the masses of its people well in advance of that which prevails in Britain. The Labour Government is pledged to incx-ease that advantage still further for its own people, and it suggests that the expense of so doing should be met, to a lax-ge extent, by a saving on British bondholders. Again, Professor Tocker reasons logically when he says that “if it is fair for British investors to agree to a reduction of their interest now it would have been fair over the period between 1918 and 1929, when prices were high, to incx-ease the rates on New Zealand overseas loans x-aised before the war when prices were lower. Had the prices for New Zealand exports risen over recent yeax-s New Zealand would xxot have offered a higher interest rate. Is she justified, then, in asking a lower rate because prices have fallen?” The unexpected prediction of a deficit, likely to be at least five million pounds, on this yeax-’s British finances, caused by demands of rearmament, does not promise to make bondholders at Home, with their own troubles before them, more disposed to make sacrifices that are not imperative, more especially as no dominion in peace time has ever yet borne anything like its just share of the cost of Imperial defence. Mr Nash’s statement, setting forth the buoyant state of New Zea-

land finances, while it dispels the fear that might have been caused by earlier pronouncements, may at the same time defeat his first end by suggesting that New Zealand, after all, has no need of the adjustment that has been suggested. The matter will bo discussed further by Mr Nash in London, and we have no doubt that it will be discussed then in the best manner.