The New Zealand Times. WEDNESDAY, FEBRUARY 4, 1914. AMATEUR FINANCE

New Zealand Times, Volume XXXVIII, Issue 8647, 4 February 1914, Page 6

The New Zealand Times. WEDNESDAY, FEBRUARY 4, 1914. AMATEUR FINANCE

However gratifying the success of tho most recent Now Zealand loan may bo to tlie Hon. James Allen, and he has every reason for satisfaction, it has served the purpose of completely exploding any reputation as a financier that he may have achieved by dint of many years of persistent fault-finding. Mr Allen occupies to-day the humiliating position of tho dissatisfied musical or dramatic critic who is invited to go on the stage and endeavour to do better. He has availed himself of the invitation. He is in the glare of the footlights. But never, in the whole of’ its political history, has this country witnessed such a deplorable and hopeless failure as a. public financier. There is no question about the success of the loan. It has been subscribed many times over. But if the Hon. James Allen had been the shrewd and clever financier that ho pretends to be, ho would have read the sigiis of the times more correctly than he did. He would hare realised that, with money offering in the open market at one per cent., the time had arrived to get his loan one-half per cent, cheaper. He would also have had the common-sense to secure it for a longer period than ten years. What becomes now of all Mr Allen’s blatant condemnation of short-dated loans? When he was raising the dearest loan that New Zealand had floated for twenty-five years, he invited the applause of the people because he had secured it for thirty and possibly for fifty years. It was useless to try and convince him that when money was dear loans should be raised for short periods, and when money wds cheap it was good business to moke the period long. Mr Allen knew better. According to him, and he was warmly supported by that , other financial genius, Hon. W. Fraser, all loans should be for long periods, whether they wore dear or otherwise, and then the country would not be bothered with the necessity for renewing, them. The fact that the heavier bill for interest had to bo met for thirty or possibly fifty years did not enter into the Hon. James Allen’s limited calculations. And So it happened that Mr Myers was ridiculed by all true “Reformers, led by the Hon. James Allen, because ho floated a loan for such a , short period as two years when money was excessively dear. In the same way, a (Jhare of the ridicule waa levelled at Sir Joseph Ward, because he declined, when compelled to pay an excessive rate of interest, to commit the country to the liability for tho higher rate for more than a short period. It was useless for the Libo pals to argue their methods were sound, because money was bound to become cheaper, and it would be easy then to convert or renew for a longer period at a lower rate of interest. The Hon. James Allen knew better. The Hon. W. Fraser knew better. They had learned the art of superior finance while criticising Liberal Budgets through a period of many instructive yeans. But apparently they had failed to profit by most useful lessons. When money became cheap and plentiful last week, the time was opportune for a long-dated loan, as well as a cheap one. But what had become of the Hon. James Allen’s theory that all loans should ho for long periods? Like tho Hon, F. M. B. Fisher, he appears to have suddenly adopted the conviction that “consistency is tho refuge of fools,” because his last loan is for the short period of ten years. In a word, he has become a convert to the arguments in favour of short loans, but he has not been smart enough to realise that they are good business only when money is dear. With money at the highest rate, he plunged gaily into a thirty or possibly fifty yearn’ Joan, with its heavy annual liability for interest, but when money suddenly ■ became cheap and plentiful he would not accept it for a longer period than ten years. And this is the much■naunted superior finance of “Reform.” As we have said, this loan has finally exploded any reputation that may have been conceded to the Hon. James Allen as a public financier. He has proved himself, so far as his three loans are concerned, to be the most hopeless and incompetent muddler that has over held the Treasurer’s portfolio in this country. And yet Mr Allen has been well advised. He has had the advantage of watching Sir Joseph Ward’s successful financial operations extending over a period of many years, to say noth-

ing of the disinterested and valuable advice extended to him by the Liberals, but he has persisted in puisuing a financial policy that is as unreasonable as it is disastrous to the countrv. In the face of these results, the people of New Zealand will be able to assess the financial criticism ot the Hon. James Allen in recent years at its true value, which is nothing at all. At the same time, by force of contrast, they will begin to appreciate more correctly how much this country owes to the financial _ genius and capacity of Sir Joseph Ward in connection with its loan-raising operations.

In the endeavour to hide his own discomfiture, and secure to _ himself and his Government administrative credit to which they are not entitled, the Hon. James Allen asserts that the success of the loan is duo amongst other things to the fact that the English investor knows that the “Reform” party has adopted saner methods of finance. This is claptrap of the commonest variety. The success of the loan is due solely to the circumstance that money for investment has suddenly become plentiful, and is being offered in the open market at one per cent. But, taking Mr Allen’s assertion as it stands, where is the evidence of saner finance? Is it saner finance, on the part of a Government pledged to economy, to increase tho administrative expenditure in tivo years by the enormous sum of £1,250,000? This is a point that would impress the English investor very unfavourably if he were aware of it. Fortunately, the stinking fish party being no longer tho critics in Opposition, he is not. Is it any evidence of saner finance that a Government pledged to reduce borrowing has already excessively exceeded the average of 'the borrowing of the last twenty years? It appears to us that the Hon. James Allen would be wise not to boast concerning his financial administration lest he should excite suspicion and consequent scrutiny. Then tho English investor might suddenly become Beared. ■