The Pahiatua Herald PUBLISHED EVERY EVENING MONDAY, AUGUST 29, 1938. NEW ZEALAND’S CREDIT.

Pahiatua Herald, Volume XLVII, Issue 13946, 29 August 1938, Page 4

The Pahiatua Herald PUBLISHED EVERY EVENING MONDAY, AUGUST 29, 1938. NEW ZEALAND’S CREDIT.

The “Economist’s” comment on the recent recession of prices of Now Zealand .securities in London shows that investors have been influenced, not by any suspicion that New Zealanders would repudiate their liabilities, but by the feeling that the Labour Government's proposals weaken the Dominion’s ability to meet its obligations. The people-of New Zealand know perfectly well that the first- charge on the proceeds of the country’s exports must be the interest on loans raised by the New Zealand Government in London, even if the payment of this interest means a

curtailment of imports but the London investors, who have had to endure many hard knocks in the last twenty years, have only the bare figures to guide them The significant passage in the “Economist’s” comment is the remark that if the present drain, on the Dominion’s London funds continues, the safety margin may become inadequate. 4 ‘The recent deterioration of confidence,” it says, “is due not to the threat of immediate crisis but to the uncertainty regarding the Government’s intention to- correct trends which are already disturbing and may become ominous.” The London investors are interested in the Dominion’s domestic legislation only so far as it may affect the ability to meet capital charges in England, and their nervousness is due to the fact that the Labour Party is carrying out a legislative programme that involves heavy additions to the demands on the national purse. What they do is to take the relative populations of the Mother Country and New Zealand and estimate New Zealand expenditure on a sale basis at onethirtieth of the British expenditure. They find that New Zealand is budgeting for an expenditure well in excess of that of the Mother Country. even when the heavy cost of defence is included. and, as the “Economist” says, the figures are quite sufficient, > without any bias against the Labour Government, io “raise doubts in any investor’s mind.” That is the real reason why New Zealand credit in London has been weakened.