DEBT CONVERSION.

Star (Christchurch), Volume XLIV, Issue 701, 3 March 1933, Page 4

DEBT CONVERSION.

Chamber of Commerce Gives Approval. VIEWS OF MEMBERS. General approval of the Government's decision to convert the internal debt of the Dominion was expressed at a meeting of the Canterbury Chamber of Commerce last evening, but it was pointed out that such conversion should be regarded by the Government as the first step in bridging the gap between production costs and the prices realised for primary produce. The chairman (Mr W. Bottrell) said that the Canterbury chamber, together with other chambers, had for a long time been impressing upon the Government the need for decreased overhead expenditure. The Government’s attention had been drawn to the subject of a conversion loan, and, now that it had come, he trusted that the movement would receive the endorsement of the council.

Mr W. Macbin, who was unable to attend the meeting, sent a letter in which he said that it would be opportune and helpful for the council of the chamber to compliment the Government upon its action in reducing and adjusting interest within the Dominion, and particularly to commend it for doing it by voluntary negotiation with all parties concerned rather than by summary legislation. Mr Norton Francis endorsed the views expressed by Mr Machin. Mr V. E. Hamilton drew attention to the fact that before Christmas the Government had given authority to raise a loan of £900,000 at 5i per cent. It did not look as if the Government was really seized of the position. Mr J. Mac Gibbon said that they could not look for a reduction in taxation. He thought that the chamber should indicate in what direction economies should be made.

Mr A. C. Bretherton mentioned that the time in which dissent might be signified expired on March 24. An important feature of the Bill related to the securities held by trustees. In his opinion it was unsatisfactory and differed from the methods of apportionment of recognised trustee law. The following resolution was passed: “ That this chamber expresses its approval of the Government’s decision to appeal for the voluntary conversion of the Dominion’s internal indebtedness, on the understanding that the Government will regard such conversion as a first step towards bridging the gap between production costs and the prices realised for our produce, by a steady reduction of Government and local body expenditure, which is at the present time larger than the Dominion can afford, and every possible effort to reduce costs generally.” Bill Passed by Legislative Couneil. Per Press Association. WELLINGTON, March 2. In moving the second reading of the New Zealand Debt Conversion Bill in the Legislative Council to-day, the Hon R. Masters said the measure would not only prove helpful to the Government finances, but would aid private finances and do much to bring about muchneeded confidence. They could not hope for conversion of the external debt until they had put their own house in order. The Bill was a further step in the Government’s policy of bringing about equality of sacrifice. Sir Francis Bell said that until last year, when New Zealand had imposed 10 per cent stamp duty on Government bonds, it had followed the British tradition of honouring its obligations. Now the Government was adopting the precedent of Australia and the recommendation of the National Expenditure Commission and reducing obligations it had contracted. The Minister had not stated what would happen to dissenters, but it was known they had Hobson’s choice, and that if they did not convert voluntarily they would be subject to extra taxation. The proposals under the Bill were nothing more than taxation of a special class, as investors in other forms of securities were not subject to interest reductions. The precedent set up by the Government was one which could be followed by Socialist Governments and was distinctly dangerous. He suggested that the Government should ease the position by suspending the sinking fund, as this was legitimate procedure in times of stress. He also urged that all money saved should be used for repayment of external debt.

Sir James Allen said he appealed to the patriotism of the 70,000 bondholders to respond to the Government’s proposals, and thus help the country in time of difficulty. It was to be looped it would be possible later to arrange for conversion of the external debt, and so pave the way for financial stability. The Hon D. Buddo said there was little to complain about under the Bill, and it was not likely there would be any question of retaliation against small bondholders who had refused to convert. The Bill was put through all stages without further debate and passed. “ Fraught With Benefit.”

Per Press Association. WELLINGTON, March 2. Confidence that the loan conversion •cheme would assist the revival of the Dominion’s industrial prosperity was expressed by the Governor-General, Lord Bledisloe, when opening the Karori flower show to-day. “No step New Zealand has taken since I came to this Dominion is so fraught with ultimate benefit to all its inhabitants, and there has been none which has caused me more personal satisfaction or such confident hope tor the revival of the Dominion’s industrial prosperity,” said Lord Bledisloe. “Two factors which throughout the world always tend to stultify and stagnate industrial enterprise are excessively inflated land values and excessive cost of borrowed money. In deciding by the unanimous wish of all parties in the State that the latter process is now to cease, New Zealand is displaying far-sighted wisdom, and I earnestly hope and believe that her citizens in all walks of life ■who hold Government stock will patriotically submit to the small sacrifice asked of them, in the confidence that thereby the security of their capital will be enhanced and the security of their country immeasurably strengthened.”