THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 28, 1940 WAR LOAN TERMS

New Zealand Herald, Volume LXXVII, Issue 23773, 28 September 1940, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 28, 1940 WAR LOAN TERMS

Unfavourable impressions of the compulsory loan terms produced by Mr. Nash's preliminary announcement have not been erased by the appearance of the actual prospccios. The precedent established by making the loan free of interest for three years is particularly unfortunate. Neither Britain nor any other country .in the Empire has ever resorted to this expedient. For that matter, Soviet Russia, Fascist Italy and Nazi Germany—dictatorial and totalitarian though they be—pay interest on money lent to the State, apparently agreeing with the rest of the world that it is good policy ..o to do. But not so Mr. Nash. He knows better. Yet it is possible to demur that, apart from the loss and injustice inflicted on a small section, the method will not enhance New Zealand's credit and . reputation overseas. Those abroad may well ask what things have come to in New Zealand that the Minister of Finance has been reduced to such borrowing shifts. It is extremely questionable whether it is worth raising these doubts for the sake of an annual saving of £200,000 in interest for three years. Surely that could not- have been Mr. Nash's ruling motive. Had he been intent on saving £200,000, he could have arranged it easily by cutting down the extravagant public works programme by one-hundredth.

For the sake of a little political window - dressing, therefore, Mr." Nash devised his harsh loan terms. Although the money was required for a national purpose of paramount importance —the prosecution of the war —he was careful to give his punitive proposals a very limited application. Only prosperous companies and a comparatively few individuals will be affected. r l bus it may be hoped that any injurious reactions —and such are more than possible —will be concealed from the mass of the people. That is not a courageous way of proceeding. Nor docs it suggest that the Government holds a high opinion of the people's patriotism that it hesitates to impose loan obligations on them. Instead the burden is shouldered on to a few with little regard to hardship and none to the economic consequences. Hero is shown one of the plainest marks of dictatorship disregard for the minority. If the loan terms are well and good for the few, they should' be equally so for the many. In a democracy, fish should not be made of some and fowl of the others. Even yet Mr. Nash can prove his faith in the practical patriotism of the people by making his loan apply much more widely. The money is required for a common cause and should be subscribed in common.

At the same time Mr. Nash would probably lind it most politic and, indeed, essential to soften some of his high-handed and arbitrary regulations. The prospectus provides, for instance", that "default in payment at its proper date of any instalment will render any amounts previously payable liable to forfeiture and the allotment to cancellation, and the applicant will not be regarded as having contributed to the loan." Here Mr. Nash takes powers that no Parliament or Government would grant, say, to a mortgagee or instalment-seller. T.his harsh and penal provision should at once be cancelled. Nazi regulations could not be more punitive. Another dictatorial power that should not be placed at the absolute discretion of any Minister enables Mr. Nash, if he has reason to believe any person has not subscribed to the loan in due proportion to his means, to require such person by notice to subscribe for any specified amount. The notice along Avith the amount may be published in the Gazette. Thus Mr. Nash is empowered to judge an individual's case, to fix his financial obligation, and to brand him publicly. This in a country whose sons arc fighting and dying in the battle for law and against dictatorship. In spite of the condign penalties placed at Mr. Nash's disposal to correct shortcomings, the average layman may be hard put to it to discover his loan liability if he derives income from shares of companies not incorporated in New Zealand or holds tax-free securities. Is he to be penalised by arbitrary and public assessment for his lack of knowledge of taxation intricacies 1 And how, moreover, is he to determine that, in the Minister's opinion, his subscription is "in due proportion to his means?" While the purpose of the loan is unexceptionable, Mr. Nash should give remedial attention to the arbitrary, discriminatory and harsh methods he has devised for raising it.