THE GOVERNMENT'S LOAN.

New Zealand Herald, Volume LVIII, Issue 17828, 8 July 1921, Page 6

THE GOVERNMENT'S LOAN.

Whatever may be the purpose of Sir Francis Bell's statement regarding the Government's loan in London, the telegram from Wellington reporting his observations is, in at least two respects, misleading if read literally. The Acting-Minister for Finance may be anxious to ward off a flood of applications for expenditure of the loan moneys; it is unfortunate that his explanation regarding outstanding commitments had not been more clearly phrased. The telegram states that Sir Francis Bell's statement removes the impression that the local monetary position may be relieved to some extent by the loan. It is extremely unlikeiy thai, the Minister suggested anything of the kind, for whether the " local monetary position" refers to the finances of the Government or. of the country generally, it is obvious that the loan does relieve the position to the extent of exactly the net proceeds of the issue. It should hardly be necessajy in a coun- j try thoroughly familiar with private and public borrowing to explain that the effect of borrowing £5,000,000 in London is exactly the same, on the local monetary position, as selling produce of that abroad—in this transaction the Government has sold securitleb. It placer five millions of fresh money at the disposal of the Government, and whether it is spent in London or in New Zealand, the relief is secured. But the Minister's stateI m ent that part of the money will be , used to pay interest due in London may be misleading. He does not mean that the current revenues are insufficient to pay the recurring charges on the public debt; simply, that money at the credit of the Government's account in London through this loan will be used to pay the interest bills, so that- a corresponding amount in the Treasury's local bank account will be released for expenditure on the purposes for which the loan was raised. This is merely a matter of bookI keeping that saves the cost of remitting the interest payments from New j Zealand to London. It is not surprising that part of the loan will be used to pay for railway material and equipment for hydro-electric works. What would be of interest to the public is the exact amount that is already committed for the purchase of materials and machinery from England, and how much will remain for expenditure in the Dominion in wages and other directions. If Sir Francis Bell's meaning is that only a small portion of the loan will remain after paying bills for goods in London, he might have said so more lucidly, and. while on the subject, have given the actual facts of the position.