NATIONAL FINANCE.

Lyttelton Times, Volume CXVI, Issue 16805, 15 March 1915, Page 3

NATIONAL FINANCE.

TO THE EDITOR. Sir,—Mr Nightingale says that " for e.ery pound of butter, bushel *:f wheat and bale or. wool that goes D'w.ie, payment is made in merchandise Find nothing <;lso ” ; that “nations do not exchange coin, they always pay in goods,” and that 11 all trade is barter.’’

Now. taking the five years, 1909-13,. the average excess of our exports over ! our imports, including specie, was over : .£2,000.000 a year. This proves that all trade is not barter. And during that period', nearly £3,000.000 of these imports, and over £500,000 of the exports was specie, which shows that nations do exchange coin. If wo had produced another three or four million bushels of wheat last year, we should have kept a good deal of money iu the country, and the people might have kept from fid to fid a loaf or more, perhaps, in their pockets. Air Nightingale wants to know how we should be. paid if our exports were to permanently exceed our imports.” The first question is. how we aro to pay our' foreign interest unless our exports, including specie, do exceed our imports by several millions a year. The next question is how we are to pay off our debts. According to the last Year Book, the total amount of our public debt outstanding at the end of March, 1914, was

£99,730,497, on which the interest was £3,812,570. But there were also local bodies’ debts not included in that total, as they ought to be, amounting to £17,483,332, the interest on which is £787,827. So the real total public indebtedness of New Zealand gn March 31, 1914 (nearly a year age), was over £117.000,000. and the total interest payable on it was over £4,600,000 a year. Of this interest over £3,-300,000 is owing outside. Then there is over

£106,000.000 of registered mortgages, half of which is probably foreign money, and the interest probably over £2,500.000. Besides this there are the dividends and profits of’foreign shareholders in banks, financial, mining and other companies, so that six or seven millions, that is, about a third or a fourth of our exports, is tribute to foreign capitalists. Mr Nightingale says that the exports do not belong to the Government. But how does the Government get its revenue? Is it not by credits transferred from the producers direct, or through merchants and tradesmen, to pay rents, taxes, rates, railway carriage, etc.? Mr Nightingale

says, '"lt goes without saying that New Zealand will not ho able to cease borrowing for another couple of decades (at least), let alone attempt to reduce the debt.”. Air Nightingale wants to know what is meant by " money.” “Is it gold or goods?” Now, it is evident. as our imports, including specie., do not exceed our exports, that the “money” we are borrowing is neither gold nor goods. Mr E. E : . OTA says very truly that "what the New Zealand Government gets in exchange for its debentures every year is bank credit-.” For. as Macleod says, "Bank credits, whether in the form of bank notes or deposits and cbeoues, perforin exactly the same functions, and are equivalent to the creation of so much additional capital-” Credit is money. The best way "to keep the money in the country” is to create our own State bank credits and currencyi and to encourage, all useful industries and manufactures, by giving credits at low rates of interest, as well as bv ornit't-tivo duties where necessary. Credit used to employ skill and labour in all reproductive, work creates wealth.

But. i or the banks to keep six millions of «nr gold uselessly boarded tip in thi« country, when every sovereign is badly wanted in the Bank of England to inchitain the credit- of the whole British Empire, is net only, as Mr Lloyd George s:dd. "assisting the enemies of our country probablv more effectually than by taking in> arms.” but it is the -r.e.st miserable waste of money. Tlie Bank of Krelrad would probably have given £150.000 internet (and perhaps premium) for it in deposit for the last seven months, fteno is so much money absolutely lost- With the Government guarantee and legal tender notes, the gold is not wanted here until the proclamation expires, and the unhaupv Belgians might just as .well have had—and' get, the profits. The gold of the Bank of England have fallen

from over £72,000,000 Inst November 16 to less tliau £60,000,000 last week, which proves that our six millions ought to bo there!—l am. etc., J. AIILES VEKRALL. Swnnuanoa, March 10, 1915.