BORROWING BY STATE

Otago Daily Times, Issue 23940, 16 October 1939, Page 5

BORROWING BY STATE

EXPANSION IN THE NOTE ISSUE

Borrowings by the State as shown in the weekly returns issued by the Reserve Bank have made notable increases sines the beginning of this year, and the note issue is also shown to be expanding. Although advances to the State for purposes other than primary products marketing have increased rapidly since January last, the pace shows even greater acceleration when taken over the past 12 months. This fact is disclosed in the table following;— Advances to State

Advances to the Primary Products Marketing Department, backed by produce, have also increased, but they fluctuate week by week. On October 4, 1937, they were returned at £3,649,626 and were on “Dairy Industry Account.” On October 3, 1936, that account was designated “Primary Products Marketing Department,” and the advances. amounted to £3,981,007. By January 2, 1939, these advances to the Marketing Department had grown to £5,730,791, and by April 24 they had reached a peak total of £7,609,484. After that they went up and down as stocks of produce moved up and down, but by September 25 they had been reduced to £4,593,266, and last Monday. October 9, they were returned at £4,916,496. Rise in Note Issue The rise in the note issue has been and continues to be remarkable, as the following returns will show:— Bank Notes

It Is obvious that the note issue is now rising month by month independently of seasonal demands. To-day it is over £3,120,000 more than it was at this time last year.

USE OF NATION’S CREDIT

ADDRESS BY MR DENHAM One of the most important pieces of legislation passed during the recent session of Parliament was the Reserve Bank Amendment Act, said Mr W. M. C Denham, M.P., in an address at the monthly meeting of the Invercargill branch of the Labour Party. It provided the Government with the power to use to the full the nation's credit without resorting to the usual way of raising loans from private investors or increasing taxation. “ What is there to stop the Government from supplying its own finance from its own bank against its own credit, the reaj credit of New Zealand ” asked Mr Denham. “ What does the credit of the Dominion really consist of? It is the country's ability to produce goods and services It is not the gold we possess, but the goods we are capable of producing that are the basis on which money should be made available. “ Financial credit is essentially a na-

tional property and should not be handed over to the banks, which will charge us for the use of opr own property. Do not be alarmed by those who say that the Government is courting financial disaster by inflation. This is mischievous nonsense.”

1937. October 4 500,000 1938. October 3 , 4,575,000 1939. January 2 . 11,000,000 February 8 .. ., , 11,950,000 March 6 , 12,725,000 April 3 , 12,075,000 May 1 , 12,075,000 June 5 , 12.125,000 July 3 , 10,475,000 August 7 . 13,250,000 September 4 .. .. , 14,850,000 September 18 .. ., , 15,600,000 September 25 .. .. . 16,250,000 October 2 16,800,000 October 9 17,275,000

1937. £ Oct. 4 12,954,005 Dec. 27 (Christmas demand) 15,233,127 1938. Oct. 3 13,798,628 Dec. 26 (Christmas demand) 16,641,425 1939. Feb. 20 14,888,397 Mar, 13 14,799,266 May 1 .. 15,717,266 Sept. 11 16,105,225 Sept. 25 . 16,647,695 Oct. 9 (record) 16.997,543