The Timaru Herald MONDAY, AUGUST 4, 1930. THE WORLD'S BORROWERS.

Timaru Herald, Volume CXXV, Issue 18636, 4 August 1930, Page 8

The Timaru Herald MONDAY, AUGUST 4, 1930. THE WORLD'S BORROWERS.

Notwithstanding the tragic experiences of the Australian people, who are reaping a sad harvest of their extravagant borrowing, there has been no tapering off of public borrowing in New Zealand within 1 lie past eighteen months. The Hon. W. Downie Stewart pointed out in the House of Representatives on Thursday last, that he had adopted a policy which, (hough unpopular, aimed at tapering off borrowing, but a change in Government has brought ill a new policy which lias so speeded up borrowing that loan money has been received by the new Government from overseas and over the counter at the J’ost Office, at the rate of nearly a million pounds per month. Such a policy, of course, spells disaster if it goes unchecked. Moreover, the policy of the Government of borrowing in New Zealand at 5£ per cent, has disturbed the financial conditions to the detriment of all sections of the trading community. The plight of Australia should not be ignored, since the root causes are known to everyone who cares to devote a few moments' thought to the financial policy of Australia. It might be thought that Germany, with all her reparations needs, is (he biggest borrower, and that the biggest lender in the world is the United States with all its gold. Well, this is not so on the per capita basis, at any rate, according to a report just issued by tlie League of Nations Economic Section at Geneva. This volume upsets several widely accepted ideas. The figures cover the year 1928. The country lending the most abroad per capita was not the United States, but The Netherlands, which was followed by France and the United Kingdom. The country borrowing the most abroad per capita was not Germany, but Australia, which was followed by Germany, Argentina, Norway and Hungary. Germany was greatest in the amount borrowed, her total being £213,400,000. Australia was second with a total of £53,400,000. The heaviest annual interest payments abroad per capita are not by Europeans, the most heavily indebted of European nations paying only from 8/4 to £1 per capita, but by Australia, New Zealand, Canada, Argentina, and South Africa, the citizens of these sparsely settled countries paying from £2 to £6 each. But when it comes to what are called invisible imports, the strength of Britain is revealed. The greatest net receipt from interest and dividends was still recorded by the United Kingdom, with £277,400,000 and £136,600,000 respectively, in 1928. The United States, far from being a laggard in her merchant marine, had the second greatest gross income from maritime freights in 1928, the figures being for the United Kingdom £131,400,000; for the United States £67,800,000; and for Germany £11,800,000, with Norway, Italy, and Sweden following. . Canada profits more from tourists (a valuable class of “imports”), than the country whose name is generally considered synonymous with touring, namely Switzerland. The nations receiving the most from foreign tours, are, in order, Prance, Italy, Canada, and Switzerland. These figures should not lose their significance, since as far as Australia is concerned, the chances to engage in reckless borrowing have been denied by the intervention of London financial authorities; but New Zealand since 192 S has pursued a borrowing policy the effect of which is reflected in the more , vigorous raids on the taxpayer which are proposed in the Budget. THE “BLACK” BUDGET. Unquestionably the most lucid and informative contribution to the debate on the Black Budget was offered by the Hon. W. Downie Stewart, Minister of Finance in the Reform Administration. Mr Stewart made effective reply to the ill-informed and unfair critics who have parotted out the allegation that the Reform Government “left an empty Treasury and a bare cupboard.” Equally effective was Mr Stewart’s reply to the Minister of Lands, who had declared that the “Reform policy was a policy of drift.” “If that was so,” asked Mr Stewart, “why was it that our control of the public finances met with the highest praise from all competent financial critics in England, Australia and elsewhere, and why was it that the Australians repeatedly pointed to New Zealand’s ability to borrow at practically 1 per cent, less than themselves?” The facts speak for themselves; indeed, the country to-day is faced not only with financial difficulties but enormously increased taxation by an Administration that has muddled the task so disastrously that the confidence of the business has been rudely shaken by the reckless fashion the national finances are controlled, and the haphazard way in which the Prime Minister lias set out to collect new revenue at all costs. Mr Downie Stewart declared that the “procedure adopted of combing om dozeas of special iuua:w*u

savours more of an official assignee raking in every possible asset, of liis debtor to place before his creditors, rather than that of a statesman marshalling the resources of one of the richest countries in the world.” It is only too clear, of course, that the Government has allowed Departmentalism to take such complete control, that they are stretching out all their hands to seize new revenue, in the most ruthless fashion. It is not surprising that Mr Stewart subjected the “Black” Budget to a most critical examination. Dealing with the Government’s plea that heavier taxation was the only alternative in view of anticipated shrinkage in revenue drawn from the customs. Mr Stewart completely exposed the drift that (lie national finances have taken since the present Government took office. Discussing this phase of the Budget, Mr Stewart pointed out that even if the fall in customs revenue of £1,150,000 eventuated, Mr Forbes would still have as much customs revenue as the Treasury received during the Reform Administration in 192728 or in 1928-29. The explanation is, of course, that the Government. has indulged in such an orgy of spending that they live in daiiy dread of the cupboard becoming bare. Hence the easiest way out is to tap new sources of revenue. But Mr Stewart did not confine his remarks to the Budget proposals. He dealt most effectively with the alarmist statement issued by the Prime Minister, which, was designed, as we said at the time, to prepare the heavily burdened taxpayer for a bigger dip into his pockets. But Mr Stewart hauled the Minister of Finance before the bar of public opinion and confronted him with these two observations: (a) “I resent the statement made by some papers that the new Prime Minister was the first Minister for Finance who had frankly taken the public into his confidence. My reply to that is that during my term of office and so far as I know during the time when Sir Joseph Ward was actively in control, no occasion arose for making such a startling statement as the present Minister for Finance found himself called upon to make. (b) “My second observation is that the facts disclosed by Mr Forbes were known to Ministers at the time they led the electors of Parnell to believe that everything was running smoothly. If that statement is disputed why was it that in the middle of the Parnell election campaign their erstwhile guardian angel. Mr Davy, was able to predict that there was a £3,000,000 deficit to be avoided.

The only explanation which seems to fit the present situation is that the new Administration hopes by raising false scares to justify their ruthless taxgathering proposals which are designed to provide the Government with ample funds to enable the L'nited Party to deliver a microscopic measure of the goods that were promised the country in such abundance when the Party of extravagant promises caught a section of the electors napping twenty months ago. NOT ENOUGH PUBLICITY. Having accorded twenty months’ almost slavish support to an Administration which has dismally failed to honour its election pledge to provide “jobs for all,” the Member for Timaru yesterday morning found himself so utterly at a loss to offer little but a stone to men who sought bread through employment, that he turned his critical attention to the Press of Timaru in general and this journal in particular. Doubtless, as the Member for Timaru rather shrewdly anticipated, his attack on the miserable capitalistic press created the desired diversion, and for the moment the unemployed assembled on the Bay enjoyed the Member’s little stunt. It is obvious that the Member for Timaru, finding himself confronted with a rather unsympathetic audience, sought to turn attention from himself to the Press. It remains, however, for the Member to substantiate his accusations. The assembled unemployed were told that the Press of Timaru, and this journal in particular, has failed to keep the people of this district fully informed of the Member’s efforts to help the unemployed. We are said to have suppressed the Member’s communications, which he insinuated were of vital importance to men seeking work. We give that statement a flat denial. No such communication lias been received by us. On the other hand, the Parliamentary news from Wellington lias shown just where the Member for Timaru stands; shown all too clearly, may be, for his peace of mind. Twice within the last few days the Member for Timaru has cast a vote of confidence in the present Government—the Party that undertook last year to end unemployment in ten days! Before the present Member was elected, he fiercely attacked the policy of collecting revenue by means of Customs duties. It was one of the fundamental principles of the Labour Party, we were told, to legislate in the direction of lowering the cost of living. But how far have those principles been surrendered to political expediency. Taxation through the customs in 1928 drew £7,420,000 into the national purse. Such a practice was nothing short of political plunder when followed by the Reform Government, and this was denounced by the pre-

sent Member for Timaru. Hi 1930, the Government which the Rev. Clyde Carr supports so obediently, collected £8,887,046 in Customs revenue; in other words, the Administration which the Member supports, in less than twelve months increased the customs duties by £957,000! Tliis policy, regarded during the 1928 election campaign, as fundamentally unsound, has had (notwithstanding its effect on the cost of living) the unanimous suport of the Parliamentary Labour Party, who, to a man seem to be willing to throw overboard their principles because they fear risking an appeal to the country. Moreover, already this session the Labour Party lias on two occasions meekly followed the United Party into the lobby in defence of a policy which Labour so hotly attacked a few months ago; a policy which for sheer ruthlessness in taxgathering would be hard to beat. If the Member of Timaru desired to be fair, he would frankly admit that as far as the Press of Timaru is concerned, he had been treated with unfailing courtesy, and he has been given a measure of publicity through the Press which should have saved it from the unjustifiable attack launched by (lie Member simply to lickle the ears of the men who seek work and bread rather than oratorical fireworks.