BIG PROBLEMS

Wanganui Chronicle, Volume 76, Issue 116, 19 May 1933, Page 7

BIG PROBLEMS

OVERSEAS DEBT MOVE FOR CONVERSION? THE LONDON DISCUSSIONS WELLINGTON, May JB. Although much has already beet done by the New Zealand Government in an endeavour to combat the effect* of the ruling economic conditions, there are still many problems to be dealt with, and during the World Economic Conference advantage will be taken of the presence in London of the Prime Minister (the Rt. Hon. G. W. Forbes) and the Minister of Industries and Commerce (the Hon. R. Masters), as well as other members of th© delegation. to discuss at first hand several questions of outstanding importance. The main subjects to come under review will be the conversion of debt held overseas, the establishment of a Central Reserve Bank, and the making of trade treaties with foreign countries. New Zealand has already converted her debt domiciled in the Dominion to and 4 per cent, for Government stock, and has provided the necessary machinery for the conversion to 44 per cent, of local body stock, thus creating a new and lower interest level. However, New Zealand has still heavy liabilities overseas both on account of Government and local body indebtedness. Tho Public Debt of New Zealand, according to the latest, available figures, stands at £281,942,800. It is domiciled as follows: London, £159,611,855, or 56.62 pet cent. Australia, £3,914,550, or 1.39 pet cent. New Zealand, £118,386,395 or 41.99 per cent. The. local body indebtedness amount to £65,692,606 and is domiciled as follows: New Zealand, £39,584,652 annual interest charge £2,184,490). United Kingdom, £17.533,425 (annual interest charge £895,503). Australia, £8.574.529 (annual interest charge £456,517). In order to meet the abnormal conditions existing the New Zealand Government has put into effect internal adjustments, and the view is now held by tho Government that any additional economies of a spectacular kind are impossible. In making the adjustments the Government has endeavoured to meet its external obligations to the full, but the opinion is now held that, if present conditions continue, the time will soon arrive when New Zealand will find it more than difficult to meet annual payments overseas. It is believed that the Government holds th* view that debtor and creditor should meet in order to discuss the situation in a frank and friendly spirit. Bond holders of New Zealand and United Kingdom stock have been asked to accept reduced interest on Government stock or bonds held by them and in each country they have complied. A Central Bank. Another subject which will be discussed with the authorities at Home is the establishment of a Central Reaervc Bank, which prominent members of the Government (at least) still hold to be essential, if economic stability is Io be achieved. Last session a Bill to give effect, to the establishment of a Central Bank was introduced, but it was not proceeded with. On the eve of the close of the session the Minister of Finance (the Rt. Hon. J. G. Coates) announced that, although the Bill had already been adopted as a Government measure, it was not intended to hurry it through the House, as there were several points still to be considered. There is no reason to believe that the Government has changed it" mind as to the necessity of tho legislation, and it is practically certain to be re-intro-duced and passed when the House meets again later in the year. Tn the meantime. New Zealand’s advisers abroad will have an opportunity of securing further data in support of the Bill, and they hope that when the House meets they will be in a position to counter any hostile criticism. There is still a strong feeling in the country against, a Central Bank. bu» the Government believes that to be largely due to a lack of authoritative information on tho subject. Foreign Trade. It is likely that the gathering together in London of representatives of every nation will bp taken advantage of by the New Zealand delegates to enter into negotiations for the making of trade treaties which may be of advantage to the Dominion. As Minister of Industries and Commerce, Mr. Masters has a good grip of the needs of the Dominion so far as the extension of her trade is concerned, and it is believed that that fact largely actuated the Government in asking him to go to London.