WHAT LED TO THE STRINGENCY.

Dominion, Volume 2, Issue 481, 14 April 1909, Page 8

WHAT LED TO THE STRINGENCY.

VIEWS OF SIR JOSEPH WARD. Somo interesting observations with respect to tho financial outlook wero made by the Prime Minister (Sir- Joseph Ward), whilst proposing tho toast of " Commerce" at the Chambers of Commerce dinner last night. Sir Joseph, who was greeted with applause, said ho felt sure that tho deliberations of tho delegates would bo worthy of tho most careful examination, and of tho closest consideration. Of course, they must not expect as much weight to be attached to a conclusion that was arrived at in consequence of wrong information. Ho felt sure that dcle--gates did not want wrong information to bo disseminated with regard to the Dominion. From newspaper reports ho saw that a delegate at the conferenco had made thrco allegations which wero very misleading and quite incorrect. These statements had been maio by ono of his old friends, who was a gentleman high in commercial circles in this country. As thcy_ wero calculated to carry a wrong impression, ho felt it his duty, in tho presenco of delegates, and not behind their backs, to say a word or two on those matters. Ho was suro that all wero anxious to seo New Zealand prosper; so was he. All wero anxious to see tho commercial interests of tho Dominion helped forward; so was he. And all wero anxious to assist in tho solution of any difficulties which tended to. impede progress nr commerce, or stand in the way of tho development of. tho country. When aa.

incorrect statement in connection with tho i financial position was made it was his duty in his position to mako somo allusion to it.

What the Government Has Done. Tho first allegation to which he would like to mako referanco was one to tbo effect that tho Govornmout was responsible by absorbing all local money for tho stringency that existed in New Zealand at tho present timo. That statement was untruo, aaid ho would advance proof in support of his assertion. During the twelve months ended March 31 last tho Government had not borrowed £100,000 from the public. Tho amount which had boon so received was between £90,000 and £100,000, and that had been dono unsolicited, so far as tho Government was concerned. The Government in tho meantime had brought into the country from outsido and circulated an aggregate running into sovoral hundreds of thousands of pounds. Sinco tho statemont had been published, thero had not been timo for him to ascertain tho exact amount to which ho alluded. In ono way or another the Government had been responsible for the bringing into the country a larger sum than any other organisation in tho Dominion. Ho regretted that it had been stated that money could not bo obtained from tho Government Advances to Settlers Department and other State Departments. During the past twelve months the Government Advances to Settlers Department had' lent out nearly two millions sterling—over £1,800,000 for certain. This was an enormous sum for a Government of any country to loud. Ho was perfectly certain tho commercial representatives did not expect the Government to go on lending money to the extent of millions beyond that amount. During tho same period £250,000 had been advanced to local bodies.

How tho Stringency Was Caused. Whilst he was on that point he would like to refute statements which were mado in season and out of season as to the causo of the stringency of the money market. If ono wanted to find tho cause of the real trouble, one required to look a littlo further than the financial position so far as tho country was concerned. He was speaking uot from a ,party point of view, but in the interests of tho people as a whole. It was, for instance, necessary to find out what tho financial institutions had at their disposal now compared with what they had a year or two ago. Advances had been mado by tho banks and public compan'es on, for example, both wool and land on tho basis of top values, and subsequently thero had been a drop in values. Tho differences between the amount lent on tho basis of high values and the values to-day represented a large proportion of the shrinkage. Tho figures which had been quoted at the conference by Mr. Kettle were practically right. If a recurrence of tho stringency wcro to bo prevented, what had led to its existence should bo borne in mind by ono and all. There wore people in New Zealand who had overdrawn, by comparison with values to-day, say on wool alone, as much as 30 por cent., in tho belief that the bigh prices would bo maintained. It perfectly well known also that plenty of people had not paid their reclamations, and a large, locking up had, in consequence, resulted. Another causo of the present stringency was that people had been buying land at rates entirely beyond its value, and in consequence large sums had been locked up in that way. Tho lesson to be learned should prevent peoplo going into speculations when prices were at high-water mark. No CrarJuated Tax on Buildings. There was another important matter to which he would like to direct attention. Ho was aware that delegates wished to affect public opinion as a result of their deliberations, and in addition to effect changes in the legislation, which it was believed by members would be iu the interests of tho country as a whole. That being so, it was their duty, as it was also his, not to allow a wrong impression to be conveyed. It had been stated at tho conferenco that thero was in the Dominion a graduated tax on buildings, which was totally incorrect. No buildings in any portion of New Zealandtown or country—wero subject to such a tax. During the past year he had repeatedly refused to enter into large transactions with men who wanted to sell lands in Now Zealand, and asked for spot cash, because he did not think it was in the interests of commerce. When the purchase of tho Manawa.tu Railway was carried out, involving nearly one million pounds, he had the wholo of the money provided without requiring to "aw on the banks in New Zealand for £100,000. (Hear, hoar.) Under tho agreement ho could havo utilised to tho full amount available tho moneys in tho Treasury for the purposes of payment, if ho had so desired. But in/order that tho banking and financial institutions and the peoplo m n g u * ful,est opportunity of using all tho coin available for earrving on the' industries of tho Dominion, ho had had the repayments made in London. (Hear, hear)

Australian Capital Available. Then again he would liko to refer to another statement which was an injustice to the kovornment and to tho people as a whole —tho allegation that money was not coming into the country on account of the mortgage tax. Ho would givo two illustrations, and then leave it to tho people themselves to judge, was not on that occasion going to touch upon the question whether the tax should be continued or riot. It would givo him pleasure to hear representations on the subject jt a future date. During tho past six months he had refused to take in one sum of £250,000 from Australia for invest ment in New Zealand at 4 per cent, because of a condition that the holders desired, viz , tf a Wn™ be Popaid in London If anyone doubted that that sum had been j \ e necessary information could in confidence be obtained. Further, during the K n VT th ,'S ld * robaW y tho first fort£snmn .w foUowin e r n , th the sum °* fofiLT \ P °A r f n h had boen arranged Z K hlm l rom Australia. That would show that Now Zealand's credit stood as high in Australia as. ever. Was it fair the Ait statements similar to those to which he bad referred should be disseminated to the harm JonH CIV- 3 * Whol6? ' **>6^ rtt^ltouT: PP s.) ffithhimthat