The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, MAY 12, 1933. VALUE OF CONFIDENCE

Southland Times, Issue 22013, 12 May 1933, Page 6

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, MAY 12, 1933. VALUE OF CONFIDENCE

To-day there is so little public sympathy with the investor that the deputation from the Investors Protection Association which waited on the Prime Minister did not attract much attention, and yet in the legislation the Government has put through to afford mortgagors relief, and its other operations in reducing rates of interest, it seems to have overlooked the fact that investors should receive consideration. Too often when the term “investor” is mentioned the public envisages large money-lending corporations, forgetting that many investors are small people who can afford to make sacrifices even less than those in whose interests the sacrifice is demanded. Where no hardship is involved the investor may be expected to make a sacrifice, but at the same time an effort should be made to deal more expeditiously with cases where hardship is actually involved. There is, however, a broad principle concerned of which the public should take notice. Legislation involving what one Labour member has termed an “arbitrary interference with contracts” is dangerous to the whole structure of industry and commerce, though the danger is not generally recognized because the effects of this interference with contracts are not immediately apparent. When he was Minister of Finance, Mr Downie Stewart referred to this matter in terms which should not be overlooked:

European experience seems to show that destruction of confidence in the security of savings is the most serious calamity that can befall any nation, and the Government’s chief aim must be a proper maintenance of public confidence.

The soundness o£ this observation cannot be questioned. France is suffering from the destruction of public confidence in the security of savings, and the security of investment. In the United States this lack of confidence showed itself in gold hoarding, and there have been similar exhibitions of the evil in Germany and latterly in Holland. In these countries confidence was destroyed by private action as well as by government interference. In France and the United States there were financial crashes resulting from inflationary operations, and Germany’s first experience of this broken confidence came from a similar cause. To-day funds are flowing to Britain from other countries because people have confidence in the security of British institutions. French people send their money to Britain’s banks because they will not entrust it to their own, and French banks must borrow money from Britain to make good the loss sustained through the departure of this money. AU countries will want to encourage investment and every government interference which affects the security of investment or savings will make it more difficult in the future to rehabilitate that confidence, without which industry and commerce cannot be carried on. In times like these the call of those who are in difficulties for assistance is an urgent call and it is answered sympathetically; but though assistance may be necessary the

tremendous importance of confidence in the security of contracts should never be forgotten, because it will be needed as urgently as relief is needed now and every blow struck at it now will make it harder to regain.