BIG FILLIP.

Star (Christchurch), Volume LXVI, Issue 20284, 19 April 1934, Page 1

BIG FILLIP.

MARKETS RESPOND TO BUDGET. Burst of Activity. EXPENDITURE ON ARMAMENTS ENVISAGED. United Press Assn.—By Electric Telegraph—Copyright. (Received April 19, 12.55 p.m.) LONDON, April IS. The markets opened excitedly this morning, when the Budget induced a burst of activity. Motor shares received their biggest fillip for years. Industrials and gilt-edged stock were strong, but quietened lated owing to profit-taking. Gold mines were firm, but were overshadowed by the activity in other sections. The Labour comment on the Budget is epitomised in the single sentence, £3,500,000 for the unemployed—£2o,ooo,ooo for the direct taxpayer.” The Liberals consider it unjust to reduce the standard rate of incometax, irrespective of the size of the income. Special allowances should be made to shift the burdens frcm the poorest taxpayer. Mr Chamberlain’s reference to “ inevitable additions to our expenditure ” is regarded by members of the House of Commons as an indication that he foresees the necessity for increasing armament expenditure. The “Yorkshire Observer” states, on the authority of an ex-Minister, that Mr Chamberlain rejected a proposal for a housing loan as he intends to issue an armaments loan later in the year. The “Observer” adds: “It is an extraordinary scheme, envisaging the use of war-time methods.” BURDEN LIGHTENED. First Budget for Years to Lift Taxes. British Official Wireless. RUGBY, April 17. The Budget which Mr Neville Chamberlain presented in the House of Com- \ mons to-day was the first for some j years to lighten the burden on the British taxpayer. It was the third successive year in which Mr Chamberlain has presented the Budget. Mr Chamberlain recalled that in 1932 many dark clouds still hung around the horizon. Last year, although the atmosphere was distinctly clearer, there was no settled feeling that they had reached fine weather. To-day, however, the outlook was completely brighter. During the last twelve months, he said, the evidence of improvement had continued to accumulate. There was a small but distinct rise in wholesale prices, the rates of short-term interest had achieved new low records and the position .of long-term loans had improved to such an extent that stocks such as the old 2i per cent consols actually stood higher to-day than before the war. Industrial production also had very much gone up and equilibrium had been restored in the country’s balance of payments. The statistics of such things as retail trade consumption, electricity, transport, iron and steel production, and house building in every case showed a revival of activity. All this, combined with the substantial surplus with which the financial year had ended, had established a new spirit of hope and confidence. Certain unpleasant facts, however, still had to be reckoned with before their troubles were ended. Analysing the year’s accounts, Mr Chamberlain drew attention to the extraordinary cheapness of interest on Treasury bills which, over the whole year, had averaged only 12s 6d per cent. While the amount of Treasury bills and savings certificates together at their lowest point was over £1,200,000,000, the interest amounted to little more than £15,000,000 or l£ per cent. During the year £40,000,000 of 4| per cent Treasury bonds and £24,000,000 of 51 per cent United Kingdom dollar bonds were converted into 2* per cent conversion loan or conversion bonds. Turning to the prospects for the future Mr Chamberlain said that neither last year nor the year before had he made provision either for the payment for the war debt to America or for the receipt of war debts or reparations by Britain, and in the absence of any further development he proposed to follow the same line this year. The fixed debt charge would stand at £224,000,000. Among the items of expenditure Mr Chamberlain mentioned that the continued decline in unemployment had enabled a saving compared with last year of £10,688,000. Provision had to be made for such measures as slum clearance, the campaign for better marketing for agricultural products, and improvements in rural water supplies. But, taking a reasonable and optimistic view of the course of trade he was justified in expecting a larger income from all * the most important sources of revenue. The cuts in unemployment pay and in salaries, and the additional taxation

imposed in 1931 were considered by the Government of the day as temporary expedients to meet a temporary emergency and were accepted in a brave spirit. He felt precluded from considering other classes of relief until a rough equivalent of restoration had taken place. Striking a final balance the Chancellor put the estimated revenue for this year at £706,500,000 and estimated expenditure at £705,700,000, thus leaving himself with a prospective balance of £BOO,OOO. The Chancellor ended his speech by inviting members, if they wished to estimate the wisdom of the financial policy which the Government had pursued, to glance at what was happening elsewhere. The Chancellor’s speech lasted one hour and forty-one minutes. RECOVERY NEAR. Motor Firms Surprised by Tax Reduction. LONDON, April 18. “The Times” and the “Daily Mail” welcome the Budget as convincing proof that Britain is approaching recovery, which will be further stimulated by the method of distributing the surplus. The “News Chronicle” says that the great expectations to which Mr Chamberlain referred were only half realised. His estimated revenue was only £727,000,000, which is cautious and narrow. He should have taken a bolder view and distributed concessions more generously. The city editor of “The Times” reports a favourable impression in business circles leading to a stronger general tone on the Stock Exchange. The reduction of income tax, he says, will not only lessen the burden on the taxpayers, but will encourage the financing of new enterprises and create a valuable stimulation to trade recovery. A general rise in industrial shares followed the Budget announcement, business continuing in Throgmorton Street till a late hour. Big motor interests were particularly active as a result of the reduction in the horsepower tax, which was a real surprise to the public and something that the motor trade has been praying for. The reduction will enable British manufacturers to compete with foreigners in dominion markets. Labour Criticism. The “Daily Herald” describes the Budget as thoroughly retrogressive, arid complains of the diversion of the realised surplus to the reduction of debt when every reputable economist is opposed to such a policy. The newspaper argues that the surplus should be carried as an insurance fund, thus advancing the day when the unemployment benefit can be raised to a level suitable for a civilised nation, or used to restore all the economy cuts, including those of social services. Defence Expenditure. The political correspondent of the “Daily Telegraph” learns that the conservative calculation of the disposable surplus was deliberately done, and that Cabinet agreed with Mr Chamberlain on the necessity for a margin of safety, bearing in mind the possibility of unforeseen calls, particularly connected with defence.