A NOTE-OF WARNING

Nelson Evening Mail, Volume LXI, 30 October 1928, Page 8

A NOTE-OF WARNING

WHOLESALE BORROWING The repudiation of,the United Parly's policy by Mr C. A- Wilkinson marks the second public withdrawal from, its ranks' of candidates who have been dismayed by its programmer of "Wholesale borrowing" (comments the "New Zealand'llernld"). Mr Wilkinson was not, an adherent of the organisation, but lie told a meeting of his constituents' at the beginning of last week that he was looking forward to the ■announcement of the party's policy, and'hoped-that lie would be able to subscribe to it. With prc.scient wisdom Mr Wilkinson added that the man who . made promises lavishly was the man to watch, whereas the-. man who was careful could generally be iclied upon. Mr Wilkinson has been more than, disappointed with the United Party's policy, and the United Parly has beeti'disappointcd of a recruit whose allegiance would certainly have been welcomed. Other members of the party have not attempted to explain their reasons for advocating this policy of wholeHalo borrowing, but are- content to declare, their simple faith in their leader's claim that ho could borrow £70,000,000 at, a cost lower than the London market has yet conceded to anyone, ami lend it at a' heavy loss without requiring a penny of taxation. Unfortunately for the party's policy such innocent allirmalions are not likely. ,'lu persuade British investors to cut their terms for even such a wholesale deal as £70,000.000,%ven if. the London market could be induced to withdraw its objection to loans for'State advances. An observation, by Mr J. O'. Rolleston should bo carefully considered byi the United Party and others who pretend that life Reform Administration has.' undermined (he. financial stability and consequently the' overseas credit 'of the Dominion. Pointing to the success of the last loan, lie observed that the United Party has paid a magnificeut.'ti'ibute to the Reform Administration, \by its positive declaration that the' high credit of the country will enable it to, launch a borrowing campaign of unprecedented dimensions.' Ever since, the normal activities of th« London market were resumed after the war'; New Zealand has obtained annual loans ore the most favourable terms, granted lo overseas borrowers, a record that has been frankly envied in other

parts of tin.' Empire. As Mr Rollestoi'. suggests, tlio Dominion's credit has not been created by the magic of a name, hut rests ujioii its reputation for sound und prudent government, a reputation that has endured not in spile of bub 1 beean.se of the Heforni Administration which has lasted long' enough for British, investors to havo learned its true eliiu-; acter. ! Because New Zealand's loans arc hold: in high estimation, tlm United Party can confidently talk of enormously expanding the market for its securities. They' ignore the risks of straining the country's ivcdilj they may even ha|ve undisclosed, reservations regarding the possible necessity of tempering tyiedr lavish dcinands;' but have they given sufficient thought to the dangers of j rencreussbns upon otliir finaicial operations'? Next year, £24,000,000, of (leb: matures: the Government has iiecu carefully preparing 'he way for its 'conversion,' but whatever the slate of, the country's credit, whether it is maintained or 'impaired by events in the 'interval, thai debt must lie renewed, no matter how onerous the terms. With that liability i" prospect, New Zealand cannot safely venture upon wholesale financial experiments.