TE AWAMUTU COURIER. Printed on Mondays, Wednesdays, and Fridays. FRIDAY, 2nd JUNE, 1939. FINANCIAL STRESS.

Te Awamutu Courier, Volume 58, Issue 4192, 2 June 1939, Page 4

TE AWAMUTU COURIER. Printed on Mondays, Wednesdays, and Fridays. FRIDAY, 2nd JUNE, 1939. FINANCIAL STRESS.

IT is safe to say that very many people in New Zealand awaited with interest the first references, on his arrival in England, of the Hon. W. Nash, Minister of Finance, to the financial conditions in New Zealand. He had gone Home, obviously, to negotiate with the financial powers for a satisfactory basis by which New Zealand’s Government could convert its huge amount of loan money falling due. The assertion by Mr Nash that “New Zealand will never repudiate” was the most satisfying statement that could have been expected; for there were some of Mr Nash’s colleagues who had made no pretense at equivocation or prevarication when, during the General Election campaigns, they had stated bravely that if the “moneybags of England will not lend us the money needed, the New Zealand Government will not pay them at all”—or words very much to that effect. This naturally caused a certain amount of uneasiness—this Dominion is too British to think seriously for a moment of repudiation; and a large section has also viewed With concern the tendency to ignore just claims. Money was borrowed, rightly or wrongly, and it must be repaid. That was all about it, and until such time as this country is in a position to repay it must keep on paying interest, happily, with sinking funds, so that the eventual repayment will not be felt too severely. It may be mentioned here that from time to time members of the Government, or prominent supporters, have hinted vaguely at the existence of a conspiracy of financiers to discredit and embarrass the Government. In his speech in support of the candidate of Mr R. M. McFarlane for the Christchurch South seat, Mr James Thorn, M.P. for Thames, was not content with hints. We read that he bluntly affirmed that the drain on the London funds between the end of August and the end of October last year and particularly during September and October, was the result of a deliberate determination on the part of certain financial interests to face the Government with a financial crisis if it succeeded in the election. Further, the “hidden run” on the Post Office Savings Bank in October, 1938, was “prompted by powerful political opponents of the Labour Party.” Well, Mr Thorn may be entitled to his opinion; but he is not likely to convince thinking people by his rhetoric. We read nowhere of his quoting facts and figures that are unassailable; and assuredly such facts and figures should be procurable, and presentable, if the statement was true in substance and in fact. There is really no mystery about the decline of this Dominion’s London funds since the present Government came into office, or about the Government’s present financial difficulties. The decline has been due primarily to excessive importing, brought about by increased wages and increased expenditure on public works. Nor is it surprising that the present loan of £4,500,000 was over subscribed, as the Prime Minister announced yesterday with pride. It might be asked: Where else was the money to be invested, or utilised profitably? The Government would not allow the money to be sent to any other country; interest rates were “pegged” down much lower than the terms of the present loan, and it needed little imagination to show that money that was accumulating, with nowhere to invest it, would be readily available on the attractive terms offered by the Government. May we add that the fact that the loan was over-subscribed so easily and quickly will assuredly be utilised by the Finance Minister in his representations at Home; but even if he does not state the obvious explanations they will be realised. The financial pulse at Home is beating steadily, consequent upon a clean life, and the example is commended to New Zealand and other Dominion Governments in preference to “taking the business” across to America. The rather unfortunate experience of Queensland some years ago is still remembered. The plain fact is that the Government began its term of office with a reserve of more than £40,000,000 in London, which was more than sufficient to withstand any possible loss of capital, which could not possibly have amounted to more than £10,000,000 in the past five years. That the £40,000,000 has almost vanished by now is the disturbing factor.