LONDON REACTION

New Zealand Herald, Volume LXXV, Issue 23215, 8 December 1938, Page 17

LONDON REACTION

SHARP FALL IN BONDS COMMENT BY PRESS ACTION NONE TOO SOON MAINTENANCE OF CREDIT (Received December p.m.) LONDON, Dee. 6 Prices of New Zealand Government bonds were marked down sh%rply as a result of the latest measures. Most issues lost one to one and a-half points. The 3 p per cent 1952-55 issue was quoted at £75. It has lost 10 points within a month. The High Commissioner, Mr. W. J. Jordan, issued a statement defending the action taken on the grounds of necessity and stating that it was equally in the interest of exporters as of New Zealand that tli£ position should be properly controlled. The Daily Telegraph says: "The New Zealand Government has acted not a moment too soon in order to increase the London balances. The steps, if they are wisely applied and achieve the result, should reassure bondholders. However much exporting countries regret the curtailment of exports, it is for New Zealand to adopt the measures best calculated to improve her trade balance and maintain the high credit she has enjoyed for years. Fundamental Factors The News Chronicle (Liberal) says: "The question arises whether the measures will remedy the fundamental factors causing the severe deterioration of the reserves. Social and other legislation might yet necessitate further depreciation of the New Zealand pound." The Daily Mail, in a leading article headed "The Day of Reckoning," states: "These 1 drastic measures will not cure the disease from which the country is suffering. That disease is Socialism. "The Savage Government has wrought havoc with the national finances and only increasing exports as the result of a rise in world prosperity have enabled the Dominion to keep its hesid above water. But exports for 1938 are already down £8,000,000 and the breaking point is in sight. "Prodigal Spending" "The Socialists are preparing an unparalleled programme or prodigal spending in a lavish scheme quite beyond New Zealand's capacitj' to bear." The City editor of the Times says that in effect the measures are indistinguishable from the exchange control hitherto firmly rejected and disowned by the Government spokesmen. The City editor of the Daily Herald (Labour) says New Zealand has given France and" Britain a significant example by resolutely stopping the flight of capital at the outset and so preserving the people's freedom to continue the Socialist prosperity proframme without interference from a nancial clique.