NATIONAL RECOVERY

Wanganui Chronicle, Volume 76, Issue 97, 27 April 1933, Page 7

NATIONAL RECOVERY

FINANCES OF BRITAIN REMARKABLE FIGURES PROSPECTS FOR FUTURE AN OPTIMISTIC NOTE .By Telegraph—Press Association—Copyright,. Received April 26, 5.5 p.m. RUGBY, April 25. In a crowded House of Commons, the Chancellor of the Exchequer (Mr. Neville Chamberlain) to-day presented the Budget. The main alterations in taxation proposed by him were a reduction of 24s per barrel, equivalent to Id per pint, off beer, the quality of which, he said, would be improved. There would be a reversion to the system of Half-yearly equal payments # of income tax in place of the present system whereby threequarters of the tax is to be found in the first half-year There would be a reduction in the tax on companies raising new capital of from £1 to 10s per cent., and a reduction of from 4£ per cent, to 3 per cent, in the tax on arrears of death duties and excess profits. Increases proposed.

Increases proposed were Id per gallon on heavy hydrocarbon oils, to come into operation from to-night. This would be effected by a reduction in rebate on them from Bd, which is the full amount of the duty, to 7d, the main oils affected being fuel, gas lubricating, and kerosene yield, being equivalent to £2,000,000 in a full year. There would be an equivalent duty imposed on large stocks of these oils already in the country. There would also be an increase to 4s 9d per gross duty on imported matches, with a yield in a full year of £lOO,OOO. There would also be a raising of the duty from 6d to Is on mechanical lighters. and to Is 6d when these are imported, and there would be a 6s surtax on British sparkling wines. The Chancellor also promised a considerable increase in the taxation of heavy motor vehicles to take effect as from January I next. The yield from this would be £1,750,000 in a full year, and would go to the Road Fund. He also stated that the machinery of the Import Duties Advisory Committee would be applied to artificial silks. The estimated revenue for the year was £698.770,000, and the expenditure £697,486,000, thus leaving a surplus of £.!,- 290,000.

War Debt Payment. The Chancellor said the expenditure last year was £777,000.000, and the revenue £745,000,000. The deficit of £32,000,000 would be met by borrowing. But for the war debt payment of £29,000,000 to the United States, for which no provision had been made in the Budget, the deficit would have been £3,300,000. That result, achieved in the teeth of so many difficulties, should give more solid satisfaction than the contemplation of surpluses earned in more prosperous times. He compared the present prices of Government securities with those of a year ago, and maintained that the immense financial benefits would not have beer secured if the Government had not insisted on a balanced Budget. Despite the shrinkage of international trade and the continued high level of unemployment, the purchasing and saving power of the people in Great Britain had been maintained in a very remarkable degree, and the Post Office deposits rose by over £16,000.000, and the Trustee Savings Bank business by £1,750,000. Cheapness of Money.

Referring to the abnormally low rate of discount at which Treasury bills could now be sold, he said he thought it advisable to take advantage of the present cheapness of money and convert a proportion of those bills into long-term security in the shape of the new 2| per cent conversion loan now being offered. This consolidation of the position would repay any extra interest charge that might be involved. “We have had a very considerable and misleading increase in the amount of the nominal deadweight debt,” he said. “At the same time we have laid the foundations for a very substantial decrease in the annual charge for service of the debt.” This was a permanent gain due to the war loan conversion and other operations. Regarding the war debts, the Chancellor said that in the year 1933-34 they were liable to pay the United States £51.000.000. Against this they would have received from reparations and war debts £64.500,000. But none of these figures, representing assets or liabilities. could be said to be fixed. Therefore, he proposed this year to adopt the same principle as last year, and make no provision for payments or recipts t( and from these countries.

Exchange Equalisation. in reference to the Exchange Equalisation Account, Air. Chamberlain said that fears that loss would be incurred had not been justified. The account had stood the test of experience during the past year in respect of some rather severe financial storms, and the exchange rate had remained comparatively steady. They could not risk a recurrence of the same kind of difficulties which had driven Britain off gold, and accordingly decided some time ago that it would be necessary to make an addition to the resources of the Exchange Equalisation Fund. At a later stage he proposed to ask the House to pass a resolution for that purpose. Mr. Chamberlain continued: “The House will realise that there is no connection between America’s action and the increase inthe exchange equalisation fund, which was decided upon long before we had any conception that the American Government might go off the gold standard. We have recognised from the first that the President’s action was in no sense directed to any relations or conversations with foreign countries, but was prompted by purely internal considerations. We are happ? to think our desire for international co-operation is shared by the United States, and -while we cannot disguise from ourselves that the situation, as it has developed in recent days, has involved some anxieties and requires the closest and most careful consideration, we shall await with the friendliest interest further measures which rhe Prei sident has no doubt in mind, and which

we entirely hope will promote the establishment of renewed confidence.” No Redemption of Debt. The Chancellor said he was not proposing this year to make any provision for the redemption of debt. In these times of unemployment and stress and trade depression they could, in his opinion, use the money more wisely and profitably, provided generous provision was made for debt redemption when good times came again. The Chancellor mentioned that the duty on beer decreased £6,000,000 last year. IDeclines in revenue had followed the increase in duty. The estimated cost of his reduction of Id per pint in the retail price of beer was £14,000,000. Reversion to the half-yearly system of income tax payments would benefit 2,750,000 taxpayers. Its cost would be mainly borne by the depreciation fund, amounting to £7,000,000 attached to 5 per cent, war loan, which, under the prospectus of 3J per cent, conversion loan, was no longer required. This nonrecurring item would thus be used to meet non-recurring loss of revenue. The Chancellor, concluding his speech, referred to the Washington conversations, and declared that the most hopeful prospect of any considerable advantage to prosperity lay in collaboration with other nations. The Speech Cheered.

The House cheered the delivery of the Budget, which, if not spectacular, was certainly a definite testimony of the nation’s grimly but successful struggle to maintain pre-eminence in financial stability. The lobbies accepted the Budget as more or less inevitable, though some younger members are disappointed at the refuosC to not balance the Budget and reduce income tax. The most impressive part of Mr. Chamberlain’s speech was when he reluctantly demolished as impracticable the idea of budgeting for three years and instantly cutting a shilling off income tax for a psychological effect on the country’s spirit, even at the risk of not balancing the Budget and gambling on trade recovery, which was now at the stage of materialising. “But what if the psychological response is not what is expected and confidence faltered and even withered before a balanced Budget was restored?” he asked. Comment on Speech.

Following Mr. Chamberlain, Mr. G. Lansbury claimed that the Budget was a candid confession of the futility of the Government’s efforts to restore trade and industry. The Budget was only balanced out of the lifeblood of the unemployed. "We reach a low level in our national history when it is thought that a penny off beer will save us.” Sir Herbert Samuel said that he had never heard a Budget excelling to-day’s in lucidity and conciseness. The Times, in a leader described the Budget as grim and lacking in the imagination of a financial genius, emphasising in addition that beer, income, and surtax revenues were sinking ominously and unless drastic steps were taken to reduce expenditure, which was a legacy of past profligacies, orthodox finance would soon become impossible. EXCHANGE EQUALISATION UNITED STATES COMMENT. Received April 26, 9.10 p.m. WASHINGTON, April 25. Financial experts have interpreted Hr. Chamberlain’s announcement that the £150,000,000 Stabilisation Fund would be increased, as indicating the renewed determination of the British to keep the sterling from rising, as it is now regarded as useless to attempt to peg sterling against the dollar. It is expected that it is contemplated to peg sterling against the gold standard countries, such as France, Belgium, Holland and Switzerland. According to exchange experts, this is possibly the result of the British exchange control drawing gold from these countries in the same manner as it drew on the American gold holdings earlier this year. It is asked whether this doos not present the gold countries with the alternative of abandoning gold. A total of 2,199,000 dollars of gold was shipped under license to Britain to-day as the initial step in the repatriation of some 250 million dollars of earmarked gold acquired during January and February through the operation of the Exchange Equalisation Fund before the suspension of American specie payments in March.

PRESS COMMENT Received April 26, 7.20 p.m. LONDON, April 26. . The Daily Telegraph describes the Budget as “honest and businesslike and sound in circumstances of difficulty. The chances of our winning through have been maintained by a sound, scientific stewardship on the national resources.” The Morning Post says; “It must never be forgotten that this Government was returned to carry out a policy of conservative finance, national economy and sound balance-sheets and could not depart therefrom without danger of shipwreck.” The News-Chronicle states: “The most discouraging fact is that the statement contains no liint of any policy whereby the downward course of trade may be checked and employment increased.” The Daily Mail’s comment is that it is sound if severe. The Daily Herald says: “Tariffs have failed, economy has failed and the Government has nothing else to propose apart from small adjustments of taxation and suppression of sinking fund. The Budget is a crime of omission.” Air. Loyd George was absent and Baron Snowden present at the reading of the Budget.