N.Z. STOCKS

Hokitika Guardian, 18 June 1938, Page 5

N.Z. STOCKS

FALL IN ENGLAND

FEAR OF LEAN YEARS.

(United Press Association —By Electric Telegraph—Copy r j g^i).

LONDON June 16; (

‘‘Prejudice atone does not account for -the fall of New Zealand "locks,” declares the ‘‘Financial News.” “The Dominion’s willingness to meet her obligations is not questioned, but the City doubts her ability to pay when the burden of increased spending encounters lean years. "Mr Savage’s talk of a whispering campaign shows ignorance of the psychology of bondholders who naturally are uneasy as to what will happen when revenue begins to contract, especially as the Government’s schemes involve an increase of 70 per cent in expenditure compared with 19341935.

"The dangers of a really sharp fall in the trade balance are considerable. Mr Savage’s statement of the. Government’s plans in the event of a depression savour strongly of ‘pump priming,’ and lend colour to rumours of a devaluation of the New Zealand

* The "Financial News,” however, considers that j even if a. bad period for commodity prices is, ahead, New Zealand should not, have overmuch difficulty in maintaining a safe margin of imports and exports. "There is no evidence at present that New Zealand will be faced with a return of the conditions of 1930. The Dominion public debt is not heavy for a young country. Mr Savage should, however, remember that unless New Zealand credit improves before January, 1940, lie may have to pay dearly for conversion.”

Summing up, the "Financial News” Considers that 'the strength of New Zealand’s economic position is most satisfactory. The risk is essentially political, inasmuch as' Mr Savage has more or less repudiated the idea that serious financial retrenchment in difficult times is ever necessary or desirable. There is no valid reason why, even in a protracted period of low commodity prices, New Zealand should allow herself to get into difficulties in respect to debt service^