NEW ZEALAND'S CREDIT

Otago Daily Times, Issue 23512, 28 May 1938, Page 14

NEW ZEALAND'S CREDIT

British holders of New Zealand stocks have been assured by the High Commissioner that the Dominion's finances are being capably administered, and that they need not question either the capacity or the intention of the Government to honour all of its obligations to bondholders. It is probable that most people will wonder why it was thought necessary to offer this latter assurance. There is no reason why the Dominion's credit in London should be in question. According to the Prime Minister, there has been a "whispering campaign" in London, carried on, he alleges, with the object of discrediting the Government. This may, however, be disregarded as merely a pleasant fiction, though it doubtless suits the Government to create the impression that it is constantly being " attacked from ambush" by its opponents. What was said a few days ago by Sir Thomas Wilford, by way, of comment on the report that harmful rumours were being deliberately circulated in London, may be accepted as giving the true position. Financial circles in the City, said Sir Thomas, were well informed of business and political affairs in the Dominion, and he indicated that they were not likely to be influenced by rumour when the facts were known to them. Holders of New Zealand stocks at Home doubtless do not forget that it was part of Mr Nash's task when he was abroad last year to "bounce the ball," as a preliminary to an attempt on the part of an innocently expectant Government to secure a reduction in interest charges on stock domiciled overseas. They and the general class of investors are also aware, it may be supposed, that there is a certain amount of nervousness in this country, due to the fear that the policy which the Government is pursuing will create future difficulties. But there are certainly no grounds for concluding that there is the slightest risk that the overseas obligations of the Dominion will not be met. Default, as a policy expedient, is unthinkable. The whole of the assets of the Dominion constitute a reliable security for the protection of the bondholders. If New Zealand stocks are not at the moment attracting investors at Home the explanation is not that the acquisition of them carries with it the risk of sacrifice of the investment as a result of Government action, but that domestic nervousness is being reflected on the wellinformed and sensitive London market.