WAR LOANS.

Lyttelton Times, Volume CXVII, Issue 17697, 25 January 1918, Page 4

WAR LOANS.

Tjjf fact that about three million pounds has been subscribed to the war requirements of the country by the purchase of war loan certificates might reasonably prompt tho Government to stimulate this movement. For the most part tho issue of these certificates represents savings- Unlike a considerable part of the war loans consisting of bonds and inscribed stock, the certificates do not mear. borrowing by the investors from somebody else in order to lend to the; Government. That is the great merit of tho certificate issue; it is a handy form of real saving and of actual assistance to the State: As we have pointed out before, in respect of the other war stock, much of it is' advanced to tho subscribers by the banks, which in turn are empowered to make a corresponding expansion of their note issue. This amounts to the creation of credit and currency, with tho inevitable result-, among others, of increased prices of goods. To the extent that, this movement exists, thn war is being financed on unsound lines. That the movement is considerable may

be judged from the important fact that the flotation of large loans, loans of a magnitude which it would have staggered us to mention four years ago, has not prevented the growth of bank deposits- The rate of growth has been checked, certainly, which is something, but the total of deposits and the aggregate of credits is greater to-day than it> was before the war and before the flotation of local loans. The truth is that the Dominion's war loans have been raised too easily, because credit has been created by the banks, or through the hanks with the aid of the State. It would, wo are sure, bo much healthier to secure a larger proportion of war money out of the hard savings of the jieople, and the Government could bring this about by instituting a. policy of continuous borrowing. The certificates could be mndo available to working people at a. shilling a month, and bonds could be issued at £5 or any multiple of £5, so that all cLasses would be offered a permanent or continuous form of helping themselves and the country by saving for the future and lending to the State in its present timo of need. The vnhie of the bonds on maturity might be varied according to the date of repayment. This plan is now in operation in Britain, and it practically means a bonus to the individual who lends for the longest term. It is, however, not necessary for us to go into details here. The principle of continuous borrowing, of a multiplication of steady investments in State securities, is what wo advocate. AY» should like to see certificates and bonds placed within the reach of every war saver, and an energetic campaign opened by tho Government to mnko the scheme go. The Minister of Finance would have no difficulty in securing valuable helpers in such a crusade. It would, of enurne, be essential to organise a system of publicity, by advertisement and public speaking, and probably to form committees after the plan adopted in the Mother Country. The fact requires to be hammered into tho public mind that the war cannot bo paid for, now or in the future, except by doing without something else. There appears to be no realisation of that truth at present, or there would ho more saving than there is and a corresponding reduction in the manufacture of paper money to defray war expenditure-