WHAT THE “EVENING STANDARD" SAID ABOUT N.Z.

Northern Advocate, 3 May 1937, Page 5

WHAT THE “EVENING STANDARD" SAID ABOUT N.Z.

[Special to -Northern Advocr.Te”', AUCKLAND, This Day. The latest air mail brings the, article from the London ‘Evening Standard” of April 12, which contained a criticism of New Zealand’s credit. Mr W. Nash, Minister of Finance, replied to the criticism in Lqndon the following day. The article reads as follows; “Reports recently received in London indicate that Australian, as well as British, investors in New Zealand are withdrawing their money from that country. Others, are delaying the investment of further money until they know to what extent business is going to be damaged by Socialist legislation. “Bonds Will be Affected.”

“If the present tendencies continue, there is little doubt that New Zealand bonds issued in London will be adversely affected. The total, of these New Zealand issues outstanding here is £136,b00, 000. ' ' “Of this total, £ 17,000,000 matures in 1940. It is fortunate, perhaps, that there are no earlier maturities; otherwise there wquld be great difficulty in replacing them on the 3| per cent.’ basis, the rate which they now carry,’ “Mr Nash and his associates in the Government have - devised a plan which they think wise and wbnderfiil. State trading is to be carried on>oh a vast scale; everything is said to .be designed tp assist the underdog, and those in control fail to recognise that ho‘ tax or burden can be levied on, the rich without also hurting the poor. ■ ;; ,N/ ' V ’• ‘ ’ “Thb advice’ of well-intentioned Capitalists or men of business is being ignored; none of those men of high integrity are given credit for good intentions and public spirit. ; Fanatical Views. . “Only the views of inexperienced idealists and fanatics are given any consideration in New Zealand today. “Accordingly, not only should investors not purchase New Zealand Government bonds, but they should avoid securities of commercial enterprises dealing exclusively with *that country. “An important part of the legislative programme, establishes cumbersome machinery to guarantee to farmers the payment of a price for their products which permanently covers their cost of production, secures to them an income adequately remunerating them for their labours, and guarantees to them cash returns which will increase progressively with the increase in their production. Fear of Inflation. “This, system of guaranteed prices is to be effected by the Government taking over and marketing any produce they think fit, paying the producer his guaranteed price, and then selling his products in ,the open market for what they' will fetch. “This notion presumes that New Zealand can control prices of her produce in the world markets. It presumes also that all farmers are equally well situated for production, and that they are all equally efficient. “If woxdd prices fall, however, and New Zealand’s Government finds that mass trading of this kind cannot be done profitably, then the gap between the price received from abroad, and the price paid to the farmer, can only be made up by inflation. The Danger.

“This increase in the output of paper money does not increase the volume of exchangeable goods. It increases costs and reduces the ability to purchase goods from abroad. This, in turn, increases the cost of living, and brings hardships upon the people. “It is to be hoped that Mr Nash will x’ealise the danger early enough to prevent such a situation as developed a few years ago when some of the Australian State bonds were difficult to sell, even at 30 per cent, of their face value.