The Timaru Herald. FRIDAY, JUNE 9, 1933. BORROWING TO BRING PROSPERITY.

Timaru Herald, Volume CXXXVII, Issue 19511, 9 June 1933, Page 6

The Timaru Herald. FRIDAY, JUNE 9, 1933. BORROWING TO BRING PROSPERITY.

President Roosevelt’s decision to issue 900,000,000 dollars of new treasury notes and certificates, to meet maturing obligations, pay interest and provide funds for emergency purposes, will no doubt be seized upon by the advocates of inflation as a wholehearted endorsement of the policy of borrowing to help the country out of the slough of economic despond. The Mayor of Auckland, with the backing of an unofficial committee of responsible citizens has evolved a scheme which it is claimed will put new life into this country’s rural, commercial and industrial

activities. The deputation which approached the Acting-Prime Minister, declared that the citizens of Auckland had carefully considered various proposals and were prepared wholeheartedly to recommend that constitutional steps be taken at once to secure:

(a) Restoration of the means of payment, and lightening the burden of debt.

(b) Security to people in possession of homes and jobs.

(c) The provision of work for all at rates sufficient to ensure that none shall be without food, clothing, and shelter.

The deputation sought to convince the Government that the greatest and most urgent need of New Zealand is an increase in the money in active circulation, and it was unanimously agreed to recommend: (1) A national loan of £10,000,000 to be immediately launched, bearing’ interest at 3 per cent., with provision for compulsory subscription, if needed, as was the case with our war loans. Or (2) the immediate launching of a national loan at 3 per cent, with a provision enabling such loan to be repaid within, say, three years, out of funds to be provided by the issue of currency under the control of a board of currency. The methods suggested for bringing this money into immediate circulation include approved low-rate advances to local bodies for the prosecution of services, utilities, and general purposes, the construction and improvement of roads and bridges, the exploitation of gold mining schemes, a comprehensive programme of essential Government works, the payment of a bonus of Id per pound of wool, butter and pork produced and exported during the current season, the abolition of part-time relief employment, and an increase in the existing scale of relief workers’ wages by way of subsidy out of loan proceeds.

Supporting the Auckland scheme, the Mayor made an outspoken appeal for Cabinet action. “It should not be necessary,” the chief citizen of Auckland urged, “for New Zealand to follow the examples of other countries such as the United States and bring about a change of Administration in order to effect reforms.” The deputation urged that Mr Coates should take the initiative and put through the Auckland scheme, which involves heavy borrowing and heavy spending for a year or so, and—well, the deputation did not stop to discuss the possible aftermath of such a policy. Nevertheless, the challenge issued by the Mayor of Auckland on behalf of the committee of citizens supporting the borrowing scheme, holds good. Critics and opponents are invited to produce alternative schemes that are likely to afford substantial relief for the very large number of worthy citizens who find themselves in a parlous plight because of loss of employment. It is interesting to mention that the allocation of loan proceeds is proposed as follows:

Loans to local bodies, £1,500,000; Government subsidy on unemployment £2,500,000; subsidy to the primary industries, £3,500,000; road and bridge construction, £1,000,000; gold mining and prospecting, £500,000; Government works, £1,000,000.

The Acting-Prime Minister, with a due sense of his responsibility to the country and to the unemployed, was most cautious in his reception of the scheme, but he promised to make the closest and most sympathetic examination of the Auckland proposal. “I do not know,” was the Minister’s comment when examining the £10,000,000 loan proposal of the deputation:

“I should imagine that if you put a compulsory loan at 3 per cent, on the market to-day it would be ruination to many deserving and struggling people. In regard to the alternative suggestion, I would say that you have to be careful when you set the printing presses at work."

Obviously the first duty of the country is to look at the Auckland scheme from all angles, more particularly in view of the fact that Governments of the past are being blamed to-day for borrowing policies which have left huge burdens of indebtedness for posterity to Carry.