The Waikato Times SATURDAY, APRIL 22, 1939 FINANCIAL POLICY

Waikato Times, Volume 124, Issue 20786, 22 April 1939, Page 6

The Waikato Times SATURDAY, APRIL 22, 1939 FINANCIAL POLICY

Mr XiishN exposition of the Government's financial policy, given at the conference of the Labour Party, is calculated to have a salutary effort on public opinion. It is one of the most interesting pronouncements ever made by the Minister, and comes at a critical period in New Zealand's political history, when a firm lead is essential. Though it will shatter the dream of many people -who believed they were following a party that was pursuing a policy of providing easy and plentiful money by previously undreamed-of wizardry, it will be warmly welcomed by most people. “The full use of public credit" was something which, though not fully understood, vaguely promised unending wealth without the necessity of repayment. It was a happy dream while it lasted. Now the Minister of Finance has told the party that there is no wizardry or anything else that is unusual about his financial policy. “This means that the extension and development of New Zealand is not possible except from savings," he said after discussing the possibilities of taking credit from the Reserve Bank or of issuing an internal loan, lie intends to raise a loan, which is made possible only from previous saving, which in turn can come only fiom production. 'thus he exploded the myth still lingering in the minds of some people that all the money the country needed could be produced by the Reserve Bank's printing press. By bringing' the financial policy to earth Mr Nash might have disappointed some of his more ardent followers, but the awakening was due. It is better that the people should know that wealth cannot be created without effort. “If we spend money building roads, bridges, railways, factories or wharves, then we are using up the goods and services which have been conserved in the past, and which are being currently produced to build these capital assets, the Minister said. Reserve Bank credit could be used in an emergency, or to stimulate production, but there was a distinct limit beyond which it could not be used without reacting violently on the financial structure. Mr Nash inferred that that limit had been reached. While spending was necessary before to offset the depression,” saving was necessary now, he said. So New Zealand is apparently to have an internal loan based upon what “has been conserved in the past.” And then the question of interest rate arises. That, according to Mr Nash, has been the chief bone of contention in the Government. Incidentally, it has been one of the causes of clashing with the “Left Wing’ of the partv. The Government has fixed 31 per cent, as the maximum rate for local body finance, but Mr Nash admits that the market rate is 41 to 41 per cent. He realises that if the Government offers that rate for a State loan, interest rates in other classes of investment w.U immediately be affected. Though he did not commit himself, Mr Nash gave the impression that a higher rate than 31 per cent, will be offered. Can lie, indeed, obtain the money unless he does increase the rate ? Mr Nash concluded his statement with a strong appeal for greater effort and greater production, upon which alone New Zealand can safely build its future.