A FALLACY.

Manawatu Standard, Volume LI, Issue 182, 4 July 1931, Page 6

A FALLACY.

Mr David Jones, member for Mid-Canterbury, wandered of solid ground when he assailed the United Government for having _ raised a five million loan in England and, therefore, affected the exchange rate which was already in favour of exporters and would have been more so but for . the

loan under notice. Mr -Jones’ idea that the operation had resulted in the farmers being robbed of their just dues is open to question. The extent to which that loan was against the farmers’ interests is highly problematical, it is even possible they would have been much worse off but for the loan. Mr Jones’ attack on the Government will be popular amongst a section of electors, but it is very doubtful if this line of attack will ; do his party any good—his arguments are so unsound. Mr Jones would have been on safer grounds | had he censured the Government for having lavishly increased expenditure since -the United Party has had charge of the Treasury. New Zealand, with a population of less than a million and a half, has to find at least twenty-six millions a year by means of taxation to meet State expenditure. A substantial portion of this is used to pay the interest bill to overseas and local lenders. The pinch is felt when the national income falls. The first effect of the diminished income is to move against importers the exchange on London. Trade is then affected —imports shrink, Customs revenue automatically fails, the profits of traders become less and income tax revenue falls and so the vicious circle goes on, all because the returns from exports are insufficient to meet the outgoings. Departmental expenditure, however, is not affected by these fluctuations in trade or profits of trading concerns until a crisis such as exists at present is reached.