MANAWATU DAILY TIMES. FRIDAY, JUNE 18, 1920. PROBLEMS OF FINANCE.

Manawatu Times, Volume XLIII, Issue 1562, 18 June 1920, Page 4

MANAWATU DAILY TIMES. FRIDAY, JUNE 18, 1920. PROBLEMS OF FINANCE.

The "Mercantile Gazette" thinks that two things will lend to bring back farming land to its correct value; land will produce less per acre than it did under the commandeer, and interest will harden; it may be also that a further adverse factor will intrude itself in the shape of wages and labour. The Finance Minister will find a substantial decrease in his income tax assessments, as, although the farmer has gained substantially through the increased value of his land not having been brought into account against him for taxation purposes, he has contributed his share of income tax. If he now obtains diminished returns from his business, his cheques to the Income Tax Commissioner will be less for so long as he pays land tax on the values of years ago. How the Treasurer intends to meet the deficit on income tax which must infallibly take place, our contemporary does not know, or how he will be able to borrow money at 5 per cent, when the market is going against him remains to bo seen. Money is like any other commodity which depends upon the laws of supply and demand, and cannot be obtained unless the buyer will pay the market rate. So far as we can pee. .says the •■Gazette." Mr Massey will require a goldmine at his command from which to draw supplies; from every point sturdy suppliants are framing demands upon the public purse, the employees of the Government are making demands for millions, the military party apparently mean to annex a large portion of the country's income, railways and public works must be carried on and, let us hope, completed, while administration charges are soaring. We had 100,000 men in the field during the war and the country accepted the expense of keeping ihem there without a murmur, but it looks now as if our expenditure will be none the less in peace than it was in war. Jn Britain the Chancellor is paying off debts and the sacrifice the people there are making is producing beneficial resuits, as indebtedness is being substantially reduced; here the converse is taking place—taxation is almost the heaviest in the world, and our liabilities are increasing. What is wanted is that expenditure shall be decreased in every department, that the Government should at once free trade and commerce from all restrictions and permit the business of the country to be handled by those who understand it, and that the Government should confine itself to those matters only which properly fall within the ambit of its functions. With regard to the loan of £2,000,000 that must be found by the wealthy classes and by trading companies, the rank and file will contribute a very small percentage. But, unfortunately for the wealthier class, the loan presents nothing attractive. Take, for instance, any of the large institutions —the Banks, Public Trust Office, Government Life Insurance Department, and the big mercantile concerns, the pastoralist or farmer; these are all paying "7 per cent, of their income to the Tax Commissioner already, and Mr Massey's 5 per cent, loan to them will return £3 4/9 only per- cent. This is not an investment for which any business man will find money except under compulsion, and we think better terms should have been offered. The "Gazette" goes on to say: Sir Joseph Ward knew more about finance than does any member of the present Government, and he displayed great judgment when he kept 'he interest rate to 45 per cent. free of income tax. He was strong enough to ignore the protests of those who have nothing to lend, and by so doing got. the money he required without raising the rate of interest all round. Mr Massey has almost insuperable difficulties to contend against, clamant demands for increased expenditure, and a limited revenue. For the present position Mr Massey is no more to blame than we are, but it will require a brilliant financier to so adjust taxation and the finance of the Dominion that business men will not have all enterprise knocked out of them and prefer to pull out rather than continue in business.. We should suggest that the first thing required is a drastic cuttingdown of all unnecessary expenditure; if that were done people would more willingly subscribe to any loan; as it is, most people think that moneys lent to the Government will be frittered away in useless and unnecessary expenditure.