BORROWING OVERSEAS.

New Zealand Herald, Volume LXVIII, Issue 20898, 13 June 1931, Page 10

BORROWING OVERSEAS.

MEETING CURRENCY CHANGES ENCOURAGING GOLD PRODUCTION [by telegraph.—own correspondent.] DUNEDIN. Friday. A striking review of the economic position in New Zealand was made to-day by the chairman, Mr. W. E. Reynolds, in the course of his address at the annual meeting of shareholders of the Perpetual Trustees Estate and Agency Company of New Zealand. " Since 1924," said Mr. Reynolds, " and for some years previously, but not including the war years, New Zealand has been borrowing excessively at interest rates consistent with inflated currency, and now being called upon to meet these interest payments under a deflated currency, we must suffer accordingly, sending forward double the quantity of produce we reckoned upon sending when wo borrowed the money. We can only come into our own again when importations come down to values more in keeping with those our products are now realising, ancj this will take some time. " One important inference very clearly emphasised frojn the position made manifest to-day is that paper money can never legitimately be resorted to as a remedy, excepting in so far as it is supported by gold, for the simple reason that it contravenes economic law. Gold costs, in labour and outgoings, about £4 an ounce to win, and is for convenience standardised at this price, whereas paper money costs practically nothing. " Further, wo may notice that during the war and thereafter tho production of gold declined principally because of the inflated cost, both of labour and material required in connection with winning it, and this decline is, I think, much to be deplored. We should always remember that gold is the only one product in the world upon which a definite price is fixed. Therefore, as its standard value never alters, products on tho average move up and down in accordance with the quantity of gold available,, and when prices of products are high, tho winning of gold is not always profitable, and because the reverse applies, already we see signs of a revival of goldmining in tho Dominion. Personally, 1 would like to see tho Government doing much more than has yet been done in this direction. " Beyond advocating this and also a cessation of further borrowing from sources outsido the Dominion, I havo no further suggestion to make. It is for us by expressions of hope and confidence to contribute our share to the feeling of security, a feeling which will hasten the awaited improvement in trade. With this thought before us we should move into the future full of hope and endeavour."