The Waikato Times With which is Incorporated The Waikato Argus. SATURDAY, DECEMBER 15, 1928. FREE AND FIXED DEPOSITS

Waikato Times, Volume 104, Issue 17586, 15 December 1928, Page 6

The Waikato Times With which is Incorporated The Waikato Argus. SATURDAY, DECEMBER 15, 1928. FREE AND FIXED DEPOSITS

The Department of Economics of Canterbury College has issued a paper dealing with the economic position as shown by the banking figures. They handle the position with extreme care and say nothing to injure the feelings of anybody with the one exception of local bodies. The figures to which they refer are the returns of money placed with the banks on free and fixed deposits, which show that at the September quarterly return the free deposits were only 80 per cent, of the fixed deposits. This is undoubtedly a disquieting sign, for in a country where so much development is still to be done it is significant to And so many men sitting back and accepting bank in!crest. The college refer also to the fact that there is evidence of considerable money leaving New Zealand for investment in Australia. Another thing that causes them concern is the amount of investment in local body debentures, as they consider that the money so spent is less productive than if devoted to the expansion of ordinary business. The proof of the pudding lies in the eating, and if those who are to pay the interest are willing to have the work carried out, they probably have good reason. The truth is, of course, that money spent on making good roads gives a bigger return than can be looked for in any ordinary business. Good roads make business possible; they save time, which presumably has some value; they save expense in the upkeep of vehicles, and in the cost of horse-feed or of petrol. It is true that many farmers would cheerfully spend or waste £2 on these items if they could thereby save £1 on their rates, but the Department of Economics of the Canterbury College should see a little farther. There are doubtless different reasons operating with different people to account for the large amount of money placed on fixed deposit with the banks, but one of the main causes has been that conlidence has departed. Men have been afraid that any new enterprise could not be expected to succeed. The chief thing to be done in New Zealand for some years to come is to bring waste lands to the productive stage, and we had a Minister of Lands who said this could not be done at a price that would pay. His own recommendation was that men should turn to secondary industries, though it should have been' clear to him that whatever difficulties affected the development of land affected secondary industries in the, same way. The Department of Economics should have conducted an enquiry to see why men refrained from taking up the enterprises which they had been accustomed to pursue. One difficulty was falling prices due to thq gradual resumption of the gold standard in some shape in almost every country. In New Zealand we have maintained a paper standard; credit has been plentiful and interest rates have been high. The rate of interest to be paid for money on overdraft did not encourage any undertaking which required to borrow. Wages again have been maintained along with prices, owing to the action of the Arbitration Court. There is some justification for this in the heavy customs duties. It would be too much to expect the Economic Department of Canterbury College to stress the harm done by the protective duty on wheat and flour, which taxes everybody in the country for the sake of a small number of Canterbury wheat-growers. The taxation is a trifle for the wealthy man, but it is a serious thing for the labourer, and is a cruel injustice for the unemployed. The duty on cement is equally indefensible. While the Economic Department is blaming local bodies, it should have pointed out that any attempt to make concrete roads was rendered more difficult by an absolutely unnecessary duty on cement. High wages, high costs, and high rates of interest do not encourage enterprise, and arc as bad for secondary industries as for farming. The Economic Department of Canterbury College bewail the lack of enterprise, but it would have been more to the purpose to look for the causes. They are not hard to find. With the contention that money is leaving New Zealand for Australia we have little concern. It may be true; it is certainly true that Australian money is looking for investment here, and has been for two or three years past. The income tax there is not as heavy on the larger incomes, and there are bonds which are free of income tax to be had. Probably the money sent either from or to Australia is not a serious item in the finances of cither country. There are no grounds for doubting that New Zealand offers a favourable opportunity for enterprise. It has lagged of late, but it is our own fault. We have, however, a new Government, and await their measures to see whether they realise the causes of our recent troubles. Much good might be done by such publications as the one issued by the Economic Department of the Canterbury College,

but they must be candid and outspoken, and above all must be free from any suspicion of considering local interests. Such interests have their place and their champions, but they should not be found in the economic departments of colleges.