PREMIER’S APPEAL

Poverty Bay Herald, Volume LX, Issue 18026, 1 March 1933, Page 7

PREMIER’S APPEAL

GREAT NATIONAL EFFORT INCREASED CONFIDENCE ASSISTANCE TO INDUSTRY MANY INDIRECT ADVANTAGES (Parliamentary lioporter.) WELLINGTON, this day. "Members have heard the statement made bv the Minister of Finance, and I desire to supplement the very full information contained in that statement by an appeal to my fellow-eiti/.ens who are holders of Government stock to avail themselves of the provisions of the bill, and thus to assist in easing the , load which the country is carrying at the present critical period,' by reducing materially the burden of interest payments on our internal national debt,” said the Prime Minister, the Rt. Hon. G. W: Forbes, in a special appeal for support for the loan conversion scheme. "There can be no doubt that if the object of tills conversion scheme is attain ed, not only will the interest be lightened, but the national credit of the Dominion will be greatly enhanced. “The sharp decline in the value of our exports, due to falling market prices, within the short period of three, years, as members are aware, largely contributed to the acuteness of the Dominion’s present financial position. The value of New Zealand's exports in 1&28 was £56,LoU.OOO; in 1932 it was £33,600,000, or a decrease of 40 per cent. PROSPECTIVE DEFICIT "It has been estimated that the customs revenue for the next financial year will show a falling off 'compared with the probable receipts for this year of £1,400,0C0. The national budgetary deficit for the financial year ended March 31, 193.1, was approximately £1,640,000, and the following year £2,140,000. The ■anticipated deficit at March 31 next is £700,000, while for the next financial year we shall have to budget for a deficit of more than £4,000,000. I may say that in these times of financial stress, our position of working on unbalanced budgets is not' unusual, and primary producing countries, in particular, have felt severely the effects of the financial blizzard.

"The question of bringing about a reduction of the interest rate has for some time been engaging the earnest consideration of the Government. To maintain these payments at their present price levels has presented a problem that is difficult, or well-nigh impossible. The policy which the Government has,decided upon is contained in the bill now 'before the House, and constitutes one of the measures which, in our opinion, are necessary to assist in restoring the financial stability oi the Dominion. all our taxable resources have already been severely strained, and the country is still left with an unbalanced Budget. "I know there are some who will say that the country should maintain the present rates of interest on Government securities in fulfilment of contractual obligations, but it must be remembered that in asking for the impossible, the effect, under existing conditions, will inevitably be a deterioration of those se:urities. There can surely be no one who will claim that to safeguard jealously the gilt-edged nature of Government securities is not a wise and prudent policy for any Government to foster. BRITAIN’S EXAMPLE . . “The. jgiagnifiqept response of the people of the V ! nited : Kingdom in connection with : the eoversion of the £2,C00,000,000 war loan is still fresh in our memories. .The Chancellor of the Exchequer, Mr. Neville. Chamberlain, fias stated that this action will play a large part in the provision of favorable monetary 'conditions, and that in the restoration of active trade, nothing is more useful than a substantial reduction in the long-term rate of interest to supplement the fall in short-term money rates. The conversion scheme of the 5 per cent, war loan and the great public enthusiasm with which it was received, said Mr. Chamberlain, had placed British gilt-edged securities on a 34 per cent, basis, and it should not be long before the advantages gained by the gilt-edged borrower will spread over into other fields of investment.

“Another striking example is afforded ■y the wonderful manner in which the people of Australia responded to the appeal for the conversion of their intermi public indebtedness in 1931, amounting to £00d,000,000, based on a 22£ per cent reduction of the rates of interest on all existing securities, a result which demonstrated that Australians had faith in the future of their country and were prepared to make personal sacrifices in assisting a return to financial stability. “A general lowering in the level of interest charges in New Zealand will undoubtedly help to increase the returns of industry, release frozen capital, and make for a reduction of costs. Industry will be enabled more easily to obtain such capital as it needs, and to secure that capital on better terms. * It will also prove of material assistance to the commercial classes as well as to our primary producers. There is a great consensus of opinion that the continued existence of a very large amount of Government stock yielding a relatively high return is an artificial obstacle to a fill in interest rates to a lower level at which they would otherwise naturally ■ stand while the prevailing economic disi.iibance lasts, with' its far-reaching ;ej.e> cussions on every section of the population. SPREADING THE SACRIFICES “It is the bounden duty of a government to see that the sacrifices invoiced, ire spread as evenly and as equitably ,is possible over the whole community. The pian now proposed by the Govern meet is another case of shortening sail when the storm has burst upon us, r.nd when the safety of the ship is endanger xl the most prudent navigation is rendered absolutely necessary. “The scheme which the New Zealand jovernment has submitted to Parliament cannot succeed without wn no learted co-operation of all holders < t iovernineht securities. The bond odder will realise that it is a matter of five ..tid take; in other words, without tlr's rehabilitation plan, he may lose a gr. at leal more than he will sacrifice under it •Vithout such a plan the security represented by Government bonds may be weakened. If bondholders co-operate with the Government they will prote -t their own securities and help the country as well. It is therefore in their own interest to do all they can to ensure jomplete success for the conversion loan. “I am certain we shall not appid to them in vain. The successful couversion of our internal indebtedness will •ring acout easier credit conditims, future stability of the market, greu-u* •onfidence among investors in GovurnVient securities of all kinds, and lower uterest rates in the future. Above all, .he reputation and prestige of the Don - ijipu will be greatly enhanced in the eyres of the outside world. “Holders of Government stock :n *l-e Dominion wi)l> I am confident, respond .o, t.l.e Government s appeal with the ■aine goodwill and -patriotism xyhioJi : Ntw Zealanders have always shown wnen a great national effort is required. ’’