LOAN OR TAXATION?

Lyttelton Times, Volume CXVII, Issue 17249, 17 August 1916, Page 6

LOAN OR TAXATION?

The shareholders’ representatives on the directorate of tho Bank of Now Zealand, in a letter published to-day, advance seme very cogent reasons why the people of this country should invest liberally in the YVar Loan. Their point of view is that if the Government does not got the money in one way it will get it in another. If it cannot got it by offering high interest and the best possible security, it will get it for nothing by exorcising its powers of taxation, and the whole community, directly or indirectly, will still have to carry the burden. Not only that, -but failure to raise the loan will damage the. credit of tho Dominion and jeopardise the country's prosperity. This, of oouvse, is not putting the matter on the highest piano, as Messrs Kennedy and Watson themselves frankly admit, hut it is nevertheless sound logic and good sense, and serves to emphasise the stern necessity which underlies the Government’s appeal for fund’s. The nature of that necessity seems to be still a subject of misapprehensions on the part of the public. An impression has been current in this city that the loan money is to he used for repayment of loans falling due, while another theory is that a portion of the money is to be used for public works. The plain facts of the case are, of course, that the Loan is a loan for war purposes, pure and simple. It will go to pay for New Zealand’s current share of the Empire’s war expenditure, and for nothing else. In the event of the applications exceeding the £8,000.000 issue by a handsome margin it would undoubtedly be quite in order for New Zealand to shoulder a further share of the burden of her own war expenditure by repayment of a portion of the earlier war loans floated in London, but the contingency of over-sub-scription has not yet to bo reckoned with. Another aspect of the YVar Loan flotation which appeals to the pessimists of the commercial community is the prospect of acute depression due to the locking-up of so much capital. Against'this suggestion ib may fairly be urged that the great increase in the value of tho Dominion’s exports during tho war period has resulted in an influx of money far exceeding normal needs. The country could spare the Vhoney without fear of depression even if it were to be subscribed to a foreign loan instead of to a domestic loan that will to a very great extent be spent- in this country. In all the circumstances, considering the unprecedented amount of money available for investment, the strength of tho security, and the remission of taxation upon investments, tho only well-founded objection which can bo "made to tho War Loan is that it bears too high a rate of interest. 1 rom communications that have been addressed to us we are inclined to think that tho whole Bcheme is still imperfectly appreciated, and we hone that tho Mayor will take early steps to call a public meeting on tho subject. In the organisation of public enthusiasm tho Australians have sot us an excellent example, and wo are sure that New Zealanders are not less keen than arc the people of the 'Commonwealth to achieve success in the policy of selfreliance.