‘RECKLESS POLICY’

Gisborne Herald, Volume LXVI, Issue 20073, 20 October 1939, Page 6

‘RECKLESS POLICY’

DOMINION FINANCES LOSS OF REPUTATION REACTIONS IN BRITAIN MR. GOODFELLOW’S VIEW

The concern in Britain at New Zealand's financial position was discussed in Auckland on Wednesday by Mr. William Goodfellow, managing director of Amalgamated Dairies, Limited, and the Challenge Phosphate Company, Limited, following his return from a business visit to the United Kingdom, Europe and America. 1-Ie said he had been forced to the conclusion that the Dominion’s finances were in a deplorable condition. Mr. Goodfellow stated that it came as a shock to find New Zealand credit at such a low ebb. For instance, New Zealand banknotes had practically no value outside the Dominion, and ex-New Zealanders and friends of the Dominion in London were very concerned at the rapid deterioration of New Zealand’s financial position, One found a “fedup" feeling of resentment frequently expressed by many large exporters, who in the past had nothing bul praise for the country. Political Humbug

Optimistic .statements by responsible Government representatives did more harm than good, said Mr. Goodfellow. and, in the opinion of many, such statements were regarded as so much political humbug, the facts in regard lo New Zealand finances being

well known. For New Zealand, of all countries, to deliberately break the Ottawa agreement, which, incidentally, was very much to her advantage, resulted in considerable resentment and unfavourable comment by exporters, and was regarded as further evidence of the Dominion’s' insincerity.

Indeed, a fairly important section of the British manufacturers were, at one period, so annoyed that they wanted the British Government to cancel the Ottawa agreement, due to New Zealand’s breach of contract, I-lad this demand been actively supported by the Federation of British Industries, the most powerful political and commercial organisation in Great Britain, New Zealand to-day might have been paying the same tariff as Denmark, amounting to 15s a cwt (ljd a lb), on butter, and 15 per cent on cheese. Fortunately, the Federation of British Industries refused support meantime, and the outbreak of the European war had postponed further action. Deplorable Condition

“I am forced to the conclusion that our finances are in a deplorable condition,’’ he continued. “This is recognised in London, and it is regarded as inexcusable and as the direct result of a four-year period of extravagant and wasteful expenditure. It is also fully recognised that if the present reckless financial policy is persisted in, New Zealand will be unable to meet her oversea commitments in future.

“This was probably the main reason why Mr. Nash found it impossible lo renew the £17,000,000 loan due in January next, even at a very high rate of interest. To prevent our default, the big banks, headed by the Bank o£ England, came to our rescue. They insisted on a total repayment of the entire loan in sterling and not in New Zealand pounds, within five years.

“Our authorities in New Zealand ire evidently unaware that security s more important in London than the rate of interest,” he continued. “Four years ago, New Zealand had nearly £50,000,000 standing to its credit ir. London; now we are down lo banboards. with no money to pay trade bills. It is simply disgraceful! So Tank the London financial experts, who. after all, do know their job.”

Contraction of Farming Mr. Goodfellow said that the population in New Zealand was at a standstill and that farming, the main industry, was contracting after years of steady expansion, due to high costs. Every possible effort should be made o reduce rather than increase public debts: otherwise the Dominion, was only making it more and more riiffi•ult for the farmers to sell their produce in competition with other countries more economically governed. “I very much regret to say,” said Mr. Goodfellow, “that New Zealand the world over has lost its excellent financial reputation and that in England the white-haired boy of the Empire family is in disgrace. “In the meantime, Australia, having profited by earlier Labour excesses, Is now increasing her prestige and Is developing an excellent reputation. New Zealand, on the other hand, is regarded very much as a fool, who, having squandered a considerable fortune, now cannot pay his hills. I have decided to make this frank but rather unpleasant statement because I have seen my own country as others ■ce it overseas. I also resent very much the loss of our very excellent financial and commercial reputation.” Honouring of Agreements Further, he was convinced that the country, and especially the farmers, would pay a very heavy price for the folly unless the Dominion was preoared to scrupulously honour its agreements and keep its financial engagements in future. “We depend more than any other country on our exports, and in consequence on the. goodwill of the people of ithe United Kingdom,” he said. “Surely these things go without saying. Our Government obviously requires expert financial guidance by experienced people, and, if it is accepted, confidence will very slowly return. But it may take a decade to get back to where we were. “Now that New Zealand is in a state of war, future financial arrangements are of supreme importance,

and cosily mistakes of the recent past, surely warrant the appointment of a financial advisory committee to the Cabinet, of the best men available." lie staled that such experienced aim proved men as Mr. L. Lefaux, Mr. F. W. Dawson and Sir James Grose would be worthy of consideration. Such a committee of experts would relieve the Government of much anxiety, would create confidence, and would safeguard the all-important future financial stability of the country during'the critical days to come.