The Waipawa Mail. WEDNESDAY, APRIL 19, 1939. CAPITAL FROM SAVINGS

Waipawa Mail, Volume LXVII, Issue 91, 19 April 1939, Page 2

The Waipawa Mail. WEDNESDAY, APRIL 19, 1939. CAPITAL FROM SAVINGS

N° revolutionary recommendations on finance were adopted by the Labor Party Conference. In fact, the tone of the pronouncements on this important phase of government was marked by a moderation which Labor Conferences of a few years back would probably have condemned as pink and white and watery. On borrowing', as distinct from creditcreation, the conference was almost 1 orthodox. It approved both external and internal loans, the former to ensure importation of plant and raw materials for the expansion of secondary industries, and the latter because “essential expansion and development could only be obtained from commodities which were conserved from prior production.” This means simply the provision of capital from savings. To he sure, the statement was qualified by the proviso that the provision of credit by the Reserve Bank should be utilised to the maximum extent; and much may hang' on the meaning of “maximum.” Yet it is something to have the essential function of savings capital recognised and stated. The corollary to this is that those who provide by thrift the capital for essential expansion and development are performing a beneficial service which should be rewarded. The reward is a reasonable rate of interest and less talk about “usury.” What is reasonable? That cannot he exactly defined, and borrower and lender may have different ideas. Some guidance, nevertheless, may be obtained from the effect of the interest rate in stimulating or discouraging the provision of capital, retaining it for use in the country or causing it to flow elsewhere till artificial barriers are erected. The Government should consider the guidance given by these considerations when it determines on what conditions it will carry out local borrowing.