Danger of Cheap Money.

Gisborne Times, Volume LXVIII, Issue 10725, 24 October 1928, Page 2

Danger of Cheap Money.

A FINANCIER’S ADVICE,

“WOULD INFLATE LAND VALUES AGAIN.”

WELLINGTON, Oct. 20. “Sir Joseph Ward had something to do with the State Advances Department, and the effect of it was to inflate land values. It is - impos-. .sible to say that this huge borrow-, mg programme which he*-has announced as his. party’s goal could have* any ot her - efleer-.*”, -H-ai-d a-. prominent financier to-day. when asked to comment upon the United. Party's proposed £’/ 0,000,000 loan. “it is all tho more curious to read in another- part of his speech the fact that Sir’Joseph is of opinion that we must never again permit inflated values of land, such as ruled a few years ago, to. be a barrier in our path. The result of huge sums of cheap money, such-as He proposes to make available, no matter how carefully any Government attempted to administer it, could only be to encourage men to take more interest in the land—but such an interest as would inevitably lead to land speculation on a scale as, large- as, if not larger, than that of a few years ago. : Lf such a state of affairs returned it would need- only one Sharp turn' of the world markets against uS and in a few years we should ho in a parlous position indeed.

: “At the.' moment, despite assurances to the ’ contrary, the financial position of the Dominion is not as sound as we might wish it. I am going to put the old question : W hat Would happen if we were to stop borrowing? Sir Joseph Ward's remedy, that of piling un our debt at an alarming rate, is not remedy. In addition', if" laiid development is to be pursued intelligently, it must be done at' a. steady' rate, so that our increased induction m‘ay be adjusted to our market. “Break-neeft speed can qjdy react against us. Look at it this way : if we had half our area composed of first-class land, and were to throw it open and bring it into a state of productivity, "within a year or two our labor would turn against us by lowering the price on our products tn the overseas markets., The newlyopened land would' Ife acting comnetitivelv against the older land m the export trade. , . “The scheme as outlined is precimtate and dangerous. It Holds out the glamour of cheap money, hut does not guard against the troubles which cheap money brings in its train. And its lower rate of interest, is on the whole, illusory, for inflated values will sharplv teach the farmer that he has not made a good investment.’