WAR FINANCE.

Lyttelton Times, Volume CXVII, Issue 17078, 29 January 1916, Page 9

WAR FINANCE.

NEW ZEALAND'S SHARE. 1 PATRIOTIC WAR LOAN SHOULD BE RAISED. TO THE EDITOR. Sir,—l wrote a letter some months fcgo under the above title in -which 1 bttempted to show that tho real {.trength of our assistance lay in our arge exportable surplus of food and (clothing. ' Since then financial questions have come into prominence, and there is, a division of opinion between those who adVocato an increaso of war taxation and others who prefer a war loan. It seems a pity, when we are all united in loyalty to a common cause, that we should drift into a controversy oVer the means to be adopted. I should like, with your permission, to make a tew remarks on the two proposals. The main argument lor increased taxation is that the country is making huge war profits, and that wealth could weU afford, and should be called upon, to contribute more freely, lhere is no doubt that the greater part of the ultimate burden of tho war must tali on tho shoulders of the wealthy, for the wealth of the country is the security on which our loans are raased. \\ nether it would be wise to put more pressure on while we are "crossing the stream" may be open to question. The absence of a large proportion of our young manhood at the front, in training camps, or invalided is a serious handicap on production. If the effect of a heavy increase of taxation would be to still further handicap our primary producers, it might be sound sense to postpone such taxation till after we have crossed the river. That is a question for the Government to decide after consultation with its experienced officers, and, having reached a.decision, it should announce its policy plainly. _ . Coming now to the war loan, Canada and Australia are already raising loans to assist the Empire, arid it is urged that New Zealand should do the same according to her means instead of bor- • rowing the whole of ber war expenditure from Great Britafin. The objection raised is that New Zealand is a country in course of development and that the absorption of money 'in war expenditure would' check that development and lead to an advance in rates of interest. Would not the same objection hold good in the cases of Canada and Australia? Mr Beauchamp, the chairman of the Bank of New Zealand, has expressed Jiis opinion that moderate loans raised from time to time would not unduly disturb the money market. There is this difference between taxation and a loan., that the one is obligatory and the other voluntary, and the struggling settler who might bo crippled by.*«rtra taxation -would not be called on to contribute more than he could afford, to the loan. I suggest that an experiment should be made by inviting subscriptions to a Patriotic Wfar Loan of, say, £2,000,000. That the term of the loan should be short, say,, five years, long enough, it may be noped, to enable us to tide over the present financial difficulty, or its termination might be made to depend! on the declaration of peace, i suggest that the rate of interest should be something below current rates, so that the appeal should be made to patriotasm, not pocket, and that the people should be asked to save their money to subscribe as the French do, and that investments of £5 should be accepted. Snch a loan would not deplete the money .market; it might be subscribed to by wealthy men from patriotic motives, but its great advantage would lie in the encouragement of thrift and in the provision of a channel through which all could feel they were directly assisting the cause according to their incomes.—l am, etc., HENRY F. WIGRAM. s.