The Dominion. WEDNESDAY, APRIL 14, 1909. THE COMMERCIAL VIEW.

Dominion, Volume 2, Issue 481, 14 April 1909, Page 6

The Dominion. WEDNESDAY, APRIL 14, 1909. THE COMMERCIAL VIEW.

The delegates who have been sent by tho various Chambers of Commerce to the conference which opened in this city yesterday are all experienced business men, and thoy represent all shades of political opinion.' The gathering is quite a nonparty one, and the public will therefore recognise that its opinions on political questions of a financial character are of particular importance. To the' Socialists, no doubt, the conference will appear as a gathering of the foes of democracy, but the interests which the conference represents are the interests of the whole community, since the well-being of tho community is dependent on soundness and stability in the commercial world. The most important subject discussed at yesterday's sitting was, of course, the current financial stringency. For the most part the speeches upon the motion advanced from'Hawkc's Bay were directed against the penal taxation of capital, and the strongest, of, cases was made in favour of the contention that the Government's taxation schemes are having an evil effect in discouraging the investment of capital in New Zealand. Nobody, we should say, has any doubts upon the necessity for encouraging the investment of capital in this country. Tho Government itself is well enough aware of the importance of making New Zealand an attractive field for investment. Yet the tendency of the legislation of the last few years has been, by treating capital from the standpoint of the aggressive Socialist, to make New Zealand unattractive to the investor. The staple argument of those whose business it is to defend the "progressive" legislation that is.associated with the Liberal party generally takes tho shape of a request to be shown where and when and how capital has ever been driven out of the country. Several of the speakers at tho opening session of tho conference quoted actual cases of the discouragement of capital. Most people who are aware of what is going on in the commercial world

havo knowlodgo of such cases. In his speech at tho dinner given to the delegates to the conference last evening, Sir .TosEnr "Wakd referred to some of the points raised during tho afternoon's discussion. Ho was not able to throw any new light on tho situation beyond the fact that ho gave an emphatic contradiction to the statement that there is a graduated lax on business premises. "What bearing the offer of Australian capital to the Government at 4 per cent, has cm the contention that the mortgage tax is assisting (;o frighten capital away from tho Dominion is not very clear. The two things arc quite distinct. Even the putting forward of this offer of a quarter or half a million of Australian capital at 4 per cent, at par as an evidence'of New Zealand's credit in Australia is weak. Tho Australian financiers concerned arc taking advantage of tho financial situation to secure an excellent investment on very favourable torms. The most satisfactory feature of the Prime Minister's? address was his seeming readiness to give proper attention to the representations of the conference in respect of the mortgage tax, and he is to be complimented on his attitude in this direction. We need not spend much time in going into the effect which the mortgage tax and the graduated tax, and the fear that what has been done by the Government already is only a foretaste of what is to come, have had in assisting the present j financial troubles of the community. It is only stating what everybody has found out for himself to say that in spite of a long series of years of unexampled prosperity the country is suffering from a dearth of money. That the mortgage tax and the graduated tax havo done a great deal towards drying up the sources open to borrowers is beyond dispute. Mr. D. J. Nathan declares that "as soon as any person or company accumulated £40,000, the capital was, in many cases, sent away for investment because of the penal taxation that had to be paid here." But there are other causes operating against the attractiveness of New Zealand to the investor besides the actual burden of penal taxation. People with money to invest have not forgotten Dr. Findlay's ominous hint in a speech in the Legislative Council in 1907 that the graduated tax might be increased in a year or .two if it failed to bring about the subdivision of estates. Yet Dr. Findlay was conscious of the danger of making "progress" too fast. "We must remember," he said, "that for some years to, come we must look to the English money-market for the capital to promote this country, and if you give the impression to our friends in England that this country is given up to methods of confiscation, you will so unnerve those whose capital has to come here for investment as to seriously retard our progress." It is a pity that the Government has not acted upon this knowledge of tho sensitiveness of the investor. As we have said, however, it is uncertainty as to the future as much as discontent' with present conditions, that is making capital cautious.

Nor is it only by penal taxation that the Government has been working against the true interests of the country. The restoration of confidence will require something more than the removal of the taxes which place New Zealand at a disadvantage as compared with other fields for investment. The restrictive legislation affecting industry is not favourable to the development of trades and manufactures in the measure that should be expected. Even the protection offered by a high Customs tariff cannot outweigh, in the mind of a capitalist looking for an industry in which to sink his money, the risk that further surrenders to tradesunionism may make it impossible to carry on except at a loss. If New Zealand were independent of foreign capital, and if high-taxation Governments, instead of being invariably wasteful, were wiso administrators of the public funds, no great harm could result from graduated taxes, just as no great harm could result from fixing enormously high rates of wages if New Zealand were cut off from communication with the rest of the world. But so long as the country is dependent on foreign capital, and is subject to outside competition, any . good that might result from experiments in wealth redistribution is more than counterbalanced by the harm which is caused by the discouragement of the outside investor. What the speakers at the conference said yesterday the critics of the Government have been saying for a long time. Whatever reasons the Government may give for refusing to believe its critics, it cannot ignore the importance of the view which is taken of its policy by the official representatives of the commercial interests of the whole country.