NEW ZEALAND’S MENTALITY

Wanganui Chronicle, Volume 76, Issue 301, 21 December 1933, Page 6

NEW ZEALAND’S MENTALITY

yHE change in mental outlook which has come over New Zealand is remarked on by Professor B. E. Murphy in an article in the “Divestment Review.” “Admittedly times have been abnormal,” he observes, “but the spread of repudiation mentality, and the extent to which it has been translated into practice in both our public and private financial life, are somewhat alarming. Nobody in New Zealand has much faith in the sanctity of either public or private-contract, and that is a mentality for which we shall ultimately have to pay the price in the form of a higher risk premium disguised as interest. Interest rates are low to-day, but that is because of almost nonexistent industrial and commercial demand on a sound basis, and not because the confidence reposed in investments is high.’’ It is as well at this time that leaders of the prominence of Professor Murphy should put Ihe reverse side of the coin in regard Io disturbing the investor. The reverse side is apparent in the mortgage field to-day, and it is also one of the factors which causes the delay in the recovery movement in the wide world. Investors have in large measure lost faith in wide areas of investment, for various reasons, and as a result there is little willingness on the part of the general public to engage in risk-taking investment. The trouble is that the unwillingness to invest is now extending io fixed interest investments such as mortgages, and with any growth of the movement to delay paying land tax when such payments are possible, an unwillingness to invest in Government securities could easily arise. Repudiation in any form destroys credit, and while repudiation may ease the situation for a short run, it creates difficulties of long duration, the repercussions from which may last, for decades.