WHOLESALE BORROWING.

New Zealand Herald, Volume LXV, Issue 20087, 26 October 1928, Page 12

WHOLESALE BORROWING.

The repudiation of the United Party's policy by Mr. C. A. Wilkinson marks the second public withdrawal from its ranks of candidates who have been dismayed by its programme of "wholesale borrowing." Mr. Wilkinson was not an adherent of the organisation, but he 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 he would be able to subscribe to it. With prescient wisdom Mr. Wilkinson added that the man who mado promises lavishly was the mar to watch, whereas the man who was careful could generally be relied upon. Mr. Wilkinson has been more than disappointed with the United Party's policy, and the United Party has been disappointed 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 wholesale borrowing, but are content to declare their simple faith in their leader's claim that he could borrow £70,000,000 at a cost lower than the London market has yet conceded to anyone, and lend it at a heavy loss without requiring a penny of taxation. Unfortunately for the party's policy such innocent affirmations are not likely to persuade British investors to cut their terms for even such a wholesale deal as £70,000,000. even if the London market could be induced to withdraw its objection to loans for State advances. An observation by Mr. J. C. Rolleston should be carefully considered by the United Party and others who pretend that the Reform Administration has undermined the financial stability and consequently the overseas credit of the Dominion. Pointing to the success of the last loan, he observed that the United Party has paid a magnificent tribute 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 the London market, were resumed after the war, New Zealand has obtained annual loans on the most favourable terms granted to overseas borrowers, a record that has been frankly envied in other parts ol the Empire. As Mr. Rolleston suggests, the Dominion's credit has not been created bv the magic of a name, but rests upon its reputation for sound and prudent government, a' reputation that has endured not in spite of but because of the Reform Administration which has lasted long enough for British investors to have learned its true character. Because New Zealand's loans are held in high estimation, the United Party can confidently talk of enormously expanding the market for its securities. They ignore the risks of straining the country's credit; they may even have undisclosed reservations regarding the possible necessity of tempering their lavish demands; but have they , given sufficient thought to the dangers of repercussions upon other financial operations'? Next year, £21,000,000 of debt matures; the Government has been carefully preparing the way for its conversion, but whatever the state of the country's credit, whether it, is maintained or impaired by events in the interval, that debt must be renewed, no matter how onerous the terms. With that liability in prospect. New Zealand cannot safely venture upon wholesale financial experiments.