THE OUTLOOK.

Dominion, Volume 4, Issue 1166, 17 June 1911, Page 4

THE OUTLOOK.

We trust that the public will give very careful attention to the im portant speech delivered by Mr Harold Beauchajip, the chairman o: tho Bank of New Zealand, at the an nual meeting of shareholders yester day. This is the third time withir eighteen months that the ehainnax has felt it necessary to warn the public of the imperative need for economy and caution, and it is quite time that the public began to realise the meaning of these periodical interruptions of the Government's incessant decrying of the suggestion that there is a single reason why the country should not indulge itself to tho very uttermost. Day after day some Minister or other is put up to expatiate upon the unparalleled state of prosperity; day by day the nation is invited to believe that the present and the future arc magnificent beyond telling; day by day every resource of ingenuity and recklessnesses bent to the encouragement of the idea that those who plead for economy and a shortening of sail arc traitors and foolish pessimists; day by day, in blunt defiance of the facts, the party in power denounces the statement that the legislation and administration of the last few years have alarmed capital and prevented its investment in those channels of industry which mean increased employment for workers and increased wealth for the country. It is only because of the huge borrowing of tho Government, and tin false plenty that it produces, that tho public allows the interested pleadings of the Government to weigh for an instant against such grave warnings as those Mr. Beaucuajip. The very last thing that a banker would dream of doing is the sounding of a warning note excepting under the most urgent pressure of circumstances. It is his function to sustain credit and confidence by every legitimate means in his power. When, therefore, he feels constrained to issue a public plea for economy and caution we may all be sure that'he does so out of a very urgent sense of duty. This is what gives a special importance to Mr. Beauciiamp's speech. "It would be wise," .he says, "on the part of the business community

to pursue a policy of economy and caution." He thinks the trade returns arc "not encouraging," and indicative of "some little stringency in the near future." AA'hcn he says that tho coming year promises to be one of low prices for commodities, he is dealing to some extent in speculation, and we trust that the year_win be better than lie expects; but it is impossible to overlook the fact of his inability to offer any greater comfort that there may not be any "real hardship." After the prolonged.ecstasies of the Ministry and its friends, and their unmeasured denunciation of the idea that there can be even a cloud in the sky, Mil. Beauchajip's analysis of the situation and his comments upon it will seem, perhaps, shocking and inexplicable to a great many simple people. But there is no escape from the figures. By comparing the exports and imports for the past four years, Mi:. Bbauchajip finds a tendency to that over-importation tho danger and inconvenience of which were so plainly manifested three years ago. The outstanding fact is that while the exports for 1910-11 showed an increase of only £20,818 over 1909-10, the increase in imports amounted to £2,611,245. Over-importation is not due, as most people ought to know, to over-exportation; it is not "excessive exchange," r.s we may call it. There cannot be too much exchange. "Over-importation" means

the over-consumption of borrowed goods, for it is in goods that our loanscome in. It stands to reason that if wc borrow excessively, without correspondingly increasing our production, our position is unsound, I and the path to soundness will be, as it was in 1903-9, by way of pinching and straitened circumstances. The over-importation that Mr. Beauciiamp sees recurring springs from tws things: (1) the means of it that the Government affords by excessive borrowing, and (2) the inclination to it that is produced by the foolish and reckless talk of Ministers and their supporters. A year ago Mr. Beauciiamp warned the country of the evil of discouraging capital. There was abundance of loanable credit, lie said, but "money was not flowing into those channels which should exist in every new country, and which do exist in New Zealand." "The spirit of enterprise," ho said, "was wanting"; "there was a feeling "of want of confidence prevalent in the community.'' He was still more explicit yesterday. Abundance of money was available for investment, he said, and added:

"Tho scope for its employment, however, is restricted. Any industrial enterprise likely to require much labour is not viewed as a Rood proposition. Capitalists are unquestionably nervous at (ho attitude of Labour, and this is to bo deplored, for it: must bo patent that, unless there bo exhibited n spirit" of greater harmony between Labour and Capital, no quickening of industrial activity can. bo lwljcd for."

Tho Government had no reply to Mlt. Beauchamp last ye.ir excepting an inept complaint by Sin Joseph Wahd that investors ought to feci confidence, and that it, was wrong of them not to. The Piume MixisTEit was reported as having stated'in London the other day that New Zealand is a fine field for capital. Mlt. Beauchamp does not appear to think so, and Capital itself expresses its opinion hy remaining shy; and the public will have little hesitation in deciding whom it shall believe. There arc signs that the public, drugged with loans though it has been for so many years, is realising the intrinsic danger of heavy borrowing and the extravagance it leads to, and is beginning to understand also why invested capital is "the one great heading in the national statistics that does not show a large and steady growth. Our prosperity is loan-fed; it is not the healthy tiling it should be in a country of the resources which New Zealand possesses. Capital is discouraged by the existing taxes upon it, direct and indirect, and by the restrictions upon industry; but tho strongest factor in its discouragement is alarm at the possibilities which the future may contain—an alarm that Ministers take no steps to allay.