BORROWING PLANS.

New Zealand Herald, Volume LXVI, Issue 20152, 12 January 1929, Page 10

BORROWING PLANS.

An explanation has now been given by the Prime Minister of the " important London transaction " to which he made several references in the House of Representatives last month. His observations on that occasion were not intended to be enlightening, but their effect was to create an impression that a momentous situation confronted the new Government so that " if would be advisable not to rely on the London market in the meantime " for borrowed money. The actual position, as he has now disclosed it, was that proposals had been made that the Government should immediately issue a £10,000,000 conversion loan and also borrow enough new money for the requirements of the next financial year —with a limit, according to Sir Joseph Ward, of £5,000,000 It seems curious that he should have interpreted these proposals as closing the London market against the Dominion's loans. The whole tenor of his present statement is that they were made by the Minister of Finance in the Reform Government; that he had put them into definite shape, but had held over his final decision. That impression would be strengthened by his statement that he had " reluctantly but definitely " decided to make a material alteration in the proposals. Since an atmosphere of mystery was created by the debate in Parliament, it is unfortunate that his explanation is not more precisely expressed. Any misconception would have been prevented had the Prime Minister stated that the proposals for immediate borrowing did not originate with his predecessor, but emanated from the Government's financial advisers in London, and thai., as Mr. Stewart fold the House of Representatives, the latter decided, in view of the proximity of the elections, not to make any commitment, at all. Sir Joseph Ward seems to have made a mistake in stating that the proposals limited the new loan to £5,000,000. Even if any amount had been named, nothing had been done when his Government assumed office to embarrass it in tho slightest degree. Certain counsel was offered in the normal way by New Zealand's financial agents ; it was received by the Treasury and communicated to Mr. Stewart during the election campaign ; and, acting in a perfectly correct way, with full recognition of their duty to the incoming Government. Mr. Stewart and his colleagues left the recommendations wholly to their decision. There was, therefore, no question of Sir Joseph Ward having " to increase the loan from five millions to seven millions " since thpre was no decision of any kind regarding a loan by the Reform Government. Since Sir Joseph Ward is so quick to complain of misrepresentation, it. might be expected that he would be meticulously careful not to create a misleading impression in respect of others' actions.