Wairarapa Daily Times [Established Over 50 Years.] SATURDAY, 28th JANUARY, 1933. GOVERNMENT FINANCE.

Wairarapa Daily Times, 28 January 1933, Page 4

Wairarapa Daily Times [Established Over 50 Years.] SATURDAY, 28th JANUARY, 1933. GOVERNMENT FINANCE.

Most discussions of the present depression contain some criticism of the unwise financial policies pursued by certain Governments in recent years. Attention is frequently drawn to schemes which have involved unjustifiable expenditure, and to the resulting failures to maintain budgetary equilibrium. Certain countries have been blamed for their .heavy borrowings for unproductive enterprises, and for their diversion of loans raised for specific purposes to objects which would never have been approved by the lenders. Such causes have contributed to many of the defaults which have occurred, and to the widespread lack of confidence which has been a feature of the depression. One aspect of the matter which has been appreciated only recently, however, is that unsound financial policies not only react adversely on the Governments concerned, but inevitably tend to impair the credit of their nationals in the eyes of the world. Barclay's, Bank, in its November review, points out that if a Government fails to maintain a high standard of financial integrity its action inevitably tends to affect the credit of its citizens. The experience of the last few years, the bank states, has shown that in many countries the foundations upon which the public finances have rested have been decidedly unsatisfactory, with results that have only been productive of hardship and loss. The damage already done cannot be repaired in a day, but if, as a consequence of recent developments, there is a wider appreciation of the need for sounder and more cautious policies, it will be an important gain to set againstt he heavy losses incurred. If normal conditions are to be restored, there will have to be a re-

sumption of foreign lending by the large creditor countries, and credit will again have to be readily available for the conduct of international trade. Before this occurs there must be a general reestablishment of confidence. Lenders will not again enter a field in which they have already suffered heavily unless they have proof that their experiences will not be repeated. Nothing, the bank says, is better calculated to afford that proof than clear and unequivocal evidence that Governments are determined to maintain budgetary equilibrium, and to confine their capital commitments within the limits of prudent finance.