Manawatu Evening Standard. WEDNESDAY, APRIL 5, 1933. BRITAIN’S FINANCE.

Manawatu Standard, Volume LIII, Issue 109, 5 April 1933, Page 6

Manawatu Evening Standard. WEDNESDAY, APRIL 5, 1933. BRITAIN’S FINANCE.

Disappointing though it is for the Treasury to report a loss on the past fiuancial year’s operations, the statement of accounts which was issued as promptly as in other years has been well received by the people of Great Britain. In his Budget of April last, generally described at the time as “grim,” Mr Neville Chamberlain provided for a nominal surplus of £796,000. Instead, he is confronted with a deficit of £3,323,900. His expectations have, therefore, fallen short by a little more than £4,100,000. It is well-known, however, that the Chancellor a year ago did not provide for payment of interest to the United States due under the war debt funding agreement. At the same time Britain, by reason of the Lausanne Agreement, which yet has to be ratified, is not receiving war debt or reparation ' payments, both being in suspense either until ratification or an unfavourable decision. In December, however, Britain honourably fulfilled her contractual obligation by paying- the United States, on the demand being made, £28,956,000. If this sum is taken into consideration the deficit is increased to that extent. On the other hand, had Britain’s debtors maintained their payments and relief not been given to the Dominions, a sum of £37,500,000 would have been received, converting the deficit into a surplus of £5,250,000. The payment to America, the Chancellor explained in December, was covered “partly by recourse to the lower rates of interest on Treasurj r Bills, and partly by the funds provided for sinking funds which are no longer required by statute on account of the rise in the value of gilt edged securities.” The explanation in the latter connection is that certain loan redemption operations are suspended when the price of the securities concerned, in the open market, rises beyond a stated level. It is to be noted that income and surtax yielded £13,750,000 less than the estimate, and Customs and Excise £12,000,000 Jess. As regards the former, the Chancellor budgeted for a sum considerably less than in the previous financial year, knowing full well that the capacity to pay that amount on the same basis did not exist. In other words, the law of diminishing returns had commenced to operate. There was no increase in the rate, the Chancellor looking to Customs and other duties to square the expenditure and revenue. The Customs and Excise return, however, fell short of the estimate by £12,000,000 and this perhaps will not be surprising- in view of earlier official statements that the Budget figure relating to the new duties most likely would not be realised. Two items —estate duties and “sundry loans and miscellaneous” —yielded a surplus of £1,000,000 and £6,250,000 respectively. On the expenditure side there has been a saving in debt charges, and in sinking fund payments due to the rise in price of gilt edged securities following the war loan conversion operation. The cost of supply services has

not been as large as anticipated. The Budget figure was £447,204,000 and supplementary estimates amounting to £21,614,000 were later passed. Of this sum £18,010,000 was required for unemployment purposes, the level of idle workers having averaged 200,000 more than the Chancellor allowed in framing this part of the. Budget. The actual expenditure was £458,250,000 and the consequent saving £10,500,000. Unfortunately,- these savings have not been sufficient to offset the decrease in revenue, but when the magnitude of the figures is remembered the gap is but slight. Finance in government is still sound in Britain and her example to the world remains as impressive as ever. It is in striking contrast to the tremendous deficits in other countries. The United States faces a prospective deficit of £400,000,000 and France one of £96,000,000. On the other hand, had the Chancellor’s calculations not been upset first by the war debt, then by reduced revenue from taxation of incomes and through the Customs, and finally by having to budget for a greater sum for unemployment, there would have been a substantial surplus.