BRIGHTER TIMES

Otago Daily Times, Issue 22630, 23 July 1935, Page 10

BRIGHTER TIMES

TREND IN DOMINION IMPROVEMENT IN FINANCES MINISTER’S APPEAL FOR CONFIDENCE A brief review of the improvements which had taken place in New Zealand financial position, followed by a plea for the creation of a greater feeling of confidence in business, was given by the Minister of Industries and Commerce (Mr R. Masters) at the annual meeting of the Dunedin Chamber of Commerce last night. The Minister’s speech followed an address in which Sir James Grose, general manager of the National Bank of New Zealand, defended the present banking system of the Dominion. ASSISTANCE OF THE BANKS

“ I am pleased to find that at last the banks are realising their responsibility to the country by telling the people just what banking does mean to them,” said Mr Masters. “Three years ago I said the banks bad a responsibility to the people of the Dominion by educating them to their duties in the manner which Sir James Grose has so ably demonstrated to-night. The ignorance of banking which exists in this country at the present time has brought into being various organisations which advocate costless credit, and other such things, and as soon as we can dissipate these views in the minds of the people who do not understand banking and do not want to understand it, we shall have gone a good way to solving the problems of the Dominion. “ Sir James mentioned,” Mr Masters continued, “ that New Zealand had been fortunate in the assistance the banks had been able to give in the past, and I wish to take this opportunity of telling you df a very serious time the people of New Zealand know nothing about — a tim e when the Cabinet had to meet grave problems. In 1931 the Cabinet was faced with a deficit of £8,180,000, and the Dominion to-day is under a debt of gratitude to the banks of New Zealand for the sound manner in which they had conducted their 'business in the past, resulting in a financial structure which enabled them to assist fee Government through a very serious period indeed. You gentlemen, representing the commercial community of Dunedin, have a great deal to be thankful for in that respect. DECREASE OF UNEMPLOYED

“ I was pleased to hear the note of optimism struck by Sir James,” the Minister added. “It is interesting to know from figures which were given to us recently that the Government finances have improved very much indeed. There_ is not one of us here who would not like .to see every person in the country in useful work, and in this respect it is gratifying to know that the registered unemployed have decreased from 75,000 to 50,000. This means that 25,000 men* who were formerly drawing upon the unemployment funds are now contributing t 9 it. Using the unemployment tax last year as a basis we find that £3,600,000 more than in the previous year was paid out in wages in the Dominion, and on the same basis we find that there was an increase of £6,358,000 in the earnings of those who pay income tax. Thus we know that, over the whole period, spending power increased by £10,000,000. That is a very satisfactory figure indeed.

. The president, the Minister continued, had referred to a drop that had occurred in the Dominion’s production from £56,000,000 to £35,000,000. That had been very serious from the point of view of those who administered the affairs of the country. Exports, however, bad now improved to £46,000,000. The Government had been warned—and he did not intend to talk of exchange—that there would he a great fall in imports with a resultant fall in revenue. Actually the lowest period so far as imports were concerned had been the last year before the increasing of the exchange rate. The improvement last year had been over £6,000,000 with an increase of £1,000,000 in revenue. It had been found also that for the first six months of the current year there had been an increase of £500,000 in revenue compared with the corresponding period of last year. NATIONAL DEBT REDUCED “I am proud to say,” Mr Masters continued, “ that although we have gone through a depression of four years our National Debt is less than it was four years ago. This has been achieved without excessive borrowing. The payment of the annual extinction funds has reduced the debt to an extent that places us in the position of having paid more off our indebtedness than we borrowed during the depression of four years. A comparison with Australia is illuminating. The Commonwealth to-day has a floating debt of f 100,000,0Q0. She has been freely subsidising her industries during the past few years, but somebody has to meet that £100,000,000 in the years to come. One serious effect of the depression years, Mr Masters continued, had been that the poorer people who had savings in the Post Office Savings Bank had been forced to withdraw money to meet their obligations, and in three years the withdrawals had exceeded deposits by £12,500,000. It was pleasing now, however, to note that, with the return of better times to a certain extent, deposits during the past two years had exceeded the withdrawals by £3,500,000. Speaking of sales tax, Mr Masters said this brought further evidence of returning prosperity, last year’s return from that source having been £300,000 more than that of the previous year. Sales tax was not applicable to all classes of goods, but in spite of that the greater revenue gave a fair indication of the increased returns to the business people of the Dominion during the past 12 months.

SUCCESSFUL CONVERSION LOAN He was sure that all were pleased that the bank rate had dropped from 7 per cent, to 44 per cent., which was the lowest rate that he had known in bis business experience. That must be helpful to business men in this time of depression. He could not conclude without saying that the greatest tribute that the Dominion had had paid to it in recent years had been the success of the conversion loan. The shrewdest and hardest business men in London had shown that they were prepared to continue advances at one of the lowest rates of interest that New Zealand had ever known. This showed confidence that the people of New Zealand would meet their obligations —and they had met every obligation, internal and external, up to the present. No part of the world stood higher at present than the British Empire. Great Britain had shown a wonderful example so far as stable finance was concerned. While Great Britain was an outstanding example in this respect, New Zealand was also a bright spot in the Empire.

“We want confidence,” Mr Masters declared. “If every man here went out and talked confidence the effect would be far greater than you realise. I don’t blame you for criticising the Government. We have made mistakes, but we have done our best in difficult times. Don’t criticise ue unnecessarily, for you are only making bullets to be fired by those whom you do not want to use them. We should meet more often, because we want to create more confidence between ourselves than wd“ have at present.”

Finally, the Minister expressed the hope that the address given by Sir James Grose would not be the last which he would deliver on similar lines. It would do a great deal of good in creating confidence, coming, as it did, from a man who stood so high in the banking world.