OUR FINANCES

New Zealand Times, Volume XXXVIII, Issue 8646, 3 February 1914, Page 6

OUR FINANCES

THE RECENT LOAN SIR JOSEPH WARD ANSWERS MR ALLEN. Sir Joseph Ward, leader Liberal party, who returned to town from the north yesterday afternoon, had some interesting observations to make to a “Times” representative regarding tho dotation of tho New Zealand loan, and the statements of the Minister for Finance (Hon. J. Allen) thereon. “I have been very pleased to see from Mr ••Allen’s remarks that he is satisfied with the result of the flotation of tlio loan,” said Sir Joseph, “It ■is rightly a subject upon which tho Minister may fool elated, but some of his supporting statements have such a distinct colour of party, intended to be eulogistic of his own friends, and - at least condemnatory of .his opponents, that his remarks call for some slight review.

IN A STRONG POSITION. “The position of New Zealand in tho eyes of tho investing public of England,” Sir Joseph wont on, "has been a strong one for years past, and the inference that Mr Allen seeks to convey is that some superior virtue of the ■ Reform party has been tlm cause of the successful flotation. This is at least amusing, and makes one wonder wnethcr tho fact that the Russian loan was ■covered seventy times should not also bo recognised by the London financiers ns being in some way caused by the Now Zealand Reform party. If the causes for the success of our loan, which was covered five times, were really as Mr Allen says, what reason can do assigned for Russia beating us-by sixtyflvo times, because as a rule Now Zealand has done better than Russia in ■the past? . “Shorn of all its padding, the real reason for .successful flotation of the loan is the enormous accumulation •nf money ■at Home, - Both - in- the House and out of it. I have pointed ■out the position, amL-havo, frequently said that the-• price -of . money Was bound to fall. For that reason, I have pointed to tho inadvisability of obtaining long-dated- loans.when money ls‘‘ high, and only a short time ago I uttered a Word of friendly warning that tho country-should not go m for long-dated loans at that time. I am very glad to find that tho Minister for Finance has now gone in..for a shortdated loan. “It must bo quite clear to anyone with an impartial view that on an open market in London —with money down to 1 per cent., and for discount purposes to under 2 per cent. 4 per cent, is distinctly high for this country to be called upon to pay. lam rittitO' Satisfied - that the 1 rate of 31 per, ciint., which ■ was-■ one that I did. .my. best to secure in I/ondon for this country’s loans, will rule again before long.. In that case,, none of the oversea Dominions, which offer undoubted security should' bo-called upon to pay 4 p’cV. Ccntv Ifis-nt -least--not -satisfac-, tory, and the verv fact that tho present Now Zealand loan was snapped up in ninety minutes, with no chance for investors-,outside Xlr'iaip. 11' A”'”,-a-distinct intimation .t0...v5., that the British investors are looking for good r (securities. Therefore, there is no earthly reason why this or any other country should, be ,expected to pay a similar rate to tbah which ruled when 'Tvvestors were, holding their money back. A REGRETTABLE THING. “It is very, pleasing to note,” Sir Joseph continued, “that Mr Allen pays a tribute to the 3 per cent. loan raised by mo in 1895, and the adverse criticism ho levelled at me then may now be charitably forgotten. But the regrettable thing is that the finances of the country are tnade a party question by tho Reform party. The finances should nbt be forever the subject of party fighting, for it is in the vital interests of everyone that money should bo . obtained in London at the least possible rate. That rate is the governing factor to business people and to small settlers. It must bo obvious, then, that for Mr Allen to make a comparison between the 4 per., cent, and 3.) per cent, loans is unfair and uhjust. It is not a fair contrast. The same sort of argument has been used repeatedly by my opponents when referring to what, they-term liabilities, which reference has a distinct bearing upon maturing loans. In this connection! it is weir known that throughout tho whole time I was Minister for Finance,, there were renewals going on, there was conversion of loans into 3i per cent, stock, and ordinary Dominion loans were raised from time to time —all this financial work was going on simultaneously. Tho Finance Minister’s allusion to tho £3,200,000 to pay the loon coming due in December, to havo allowed fair judgment, should have stated that it was a loan of five millions, including a largo proportion for tho payment for tho Dreadnought, with, the right of conversion into 3) ■nor cent, stock. Already £1,800,0C0 has been, converted, and it is not possible for the Minister for Finance or anybody .else to' say just now that the whole of tho balance of the loan will not ho converted into such stock. Of course, the present, loan has been underwritten', and - we will have to wait for the actual result as far as tho country is concerned, till the details are to hand. ADVANCES TO SETTLERS. ■

“Mr Allen’s remarks' oh the increase of tho individual loans to settlers from £SOO to £750 should also in fairness be stated more fully,” Sir Joseph continued. “ During the last year of my Government, £2,700,000 was advanced under this head, that is, £1,500,000 more than was advanced lost year by tho present Government The reduction to the individual was necessary, because, us anyone will recognise, it is- not possible to go on lending at a rapid rate. That, however, is a different matter from the position where only £1,200,000 is lent out to settlers, who to-day require more money than over for development. 11ns must clearly be the case, ns the value of land goes up enormously every year. ■*'«ar r - Allen goes on to say, continued Sir Joseph, “that enormous liabilities were loft through promises to local authorities by tho previous Administration. That is one of those unfair statements with which upon more than one occasion-1- have had.to deal. It - is porfectly-well -known- that public bodies carrying oqt works require tho authority for their loans to oxtentV over some three 3'ears. A great many of them cannot carry out their works unless the authorisation is for tho full period. Mr Allen himself last year had to bring down legislation to provide for this being done over an additional year, for tho simple reason that many local bodies could

not commence the work for which they wore borrowing money unless they were assured of receiving money from time to timo. It may be considered all right to use this sort of thing for party purposes, but local bodies could not carry out works on the Imes suggested by Mr Allen before he took office. If the last Public Works Estimates aro looked through, it will bo found that there are numbers of loans authorised by the present Government to local bodies for an amount in some instances four times greater than the actual amount voted. I have no regrets about the assistance tho Liberal Administration gave local bodies.” THE WISER COURSE.

Regarding Mr Allen’s remarks on “ no extravagance,” Sir Joseph quoted Mr Massey as having said in tho House in 1910 that “ there must bo a tapering off of this borrowing.” “ The fact remains,” concluded Sir Joseph, “that notwithstanding all the criticism burled at the Liberals, the average of the present Government is much more than anything ever borrowed by the Liberal Government. After all, to one with an impartial view, it almost appears that it would bo wiser, when financial questions arise, to deal with each one on its merits, rather than perpetuate a system' of elevating the Reform party and discounting the previous Adminis. tration.’ 1