The Dominion WEDNESDAY, SEPTEMBER 20, 1911. THE CREDIT OF THE COUNTRY

Dominion, Volume 4, Issue 1237, 20 September 1911, Page 4

The Dominion WEDNESDAY, SEPTEMBER 20, 1911. THE CREDIT OF THE COUNTRY

It has become a very common practice on the part of members of the Government to accuse their critics on financial matters of damaging the credit of the country. This policy no doubt is pursued with a view to discrediting the critics, and possibly' in the hope of deterring them from continuing their criticism. It is not a very statesmanlike mode of answering criticism, nor is it a fair one, but it serves its purpose with timid people, and quite possibly makes an impression with a section of the public. Yesterday a deputation which waited on tho Prime Minister to urge the completion of the East Copt railway between Napier and Gisborne afforded an opportunity for tho. head of the Government" to chastise his critics in approved fashion, and incidentally to refer to an article which appeared in our columns of that morning's date. Why he should have chosen that particular article on which to base nis comments is not very clear, for every figure in it was. taken from

his own official records, and he did not attempt to prove that any single statement in it was incorrect. He confined himself to general and sweeping assertions, and in the heat of tho moment used language which was not very dignified, and which he would find it difficult to justify if put to the test. But we arc not very much concerned with that particular aspect of the matter. It is rather our purpose to briefly discuss this question of the credit of the country and to show from the lips of tho gentleman in charge of thn finances of the Dominion himselt what a shadowy and unsubstantial thing, is this bogy so constantly trotted out by Ministers to frighten timid people. The critics of the Government, we aro told, have. damaged, and arc damaging, the credit of the Dominion by their financial criticism. This assertion, we believe, was first made use of by Mr. Seddon many years ago, and it has been handed on a part of the political stock-in-tradv of the Government, and is constantly dragged out as a very convenient shelter when embarrassing questions are asked respecting the financial management of the country's affairs. Now, it is only fair to assume that this criticism which has been "damaging the credit of the country" for so many years must ere this have shown some convincing traces of its evil effects in the Budget announcements of the different Ministers of Finance, and in their Parliamentary pronouncement?. But what arc tho actual facts? What do the Budgets disclose? Mr. Seddon, in his last Budget, that of 1905, said, in referring to the loan raised during the financial year then under review:

Honourable members will join with mo in the opinion that considering the very unsettled state of. the money market the subscription for our loan of more than two anil a half times the amount required was a splendid result, and clearly demonstrated that our credit in London financial circles is as high as ever, . . .

And he added the customary dig for his critics: "notwithstanding the attempts by detractors to belittle it from time to time." Sie Josepil Ward then became Prime Minister and Minister of Finance, and in the Budgets from 1906 up to date,he has repeatedly referred to'the high place the credit of New Zealand occupies in the money markets with which we are concerned. Perhaps it will be as well, in order to leave no room for doubt, to quote extracts on this point from the last three of the present Government's Budgets—those for 1909, 1010, and 1011. In 1909 the Minister of Finance said:

. The course I N adopted has enabled me to obtain all tho moneys I required in London, on much more favourable terms than if thev had been raised by public issue of stocic or debentures. . . . Those financial operations must, I think, be considered satisfactory even by the most fastidious critic.

And again referring to renewals ana conversions in the same year:

During the financial year just closed debentures amounting to fell due. ... Of this large amount no less a sum than ,£2,118,458 was renewed by the holders. ... No one, unless deliberately refusing to acknowledge this splendid results achieved under this head of our finance, can contradict me in asserting tha'i the results are most satisfactory.

Here we have tho Minister of Finance proclaiming the high state of the credit of the country as indicated'by the transactions of 1909. In tho 1910 Budget he said:

The results of tho flotation of a 3j- per cent, loan of ,£1,850,000 were most satisfactory. . . . The loan iras mulonvritten, but tho underwriters had only to retain 17 per cent, of tho loan. Even this in comparison with tho other loans raised about tho same time was mo«t. Rr:iri*vip».

. . . In financial circles tho result of our loan'was considered as \tr.v indeed. The present high position of tho Dominion's credii is shown by the result of this loan..

Coming now to the Budget issued less than a fortnight ago, we find exactly tho same stoi - y—New Zealand's credit is declared by the Minister of Finance to be in the same exalted position. Respecting the five million loan of last year we are told that a cable message was sent to the High Commissioner asking a number of questions, amongst the number being one relating to the credit of the Dominion. The reply dealt in detail with tho loan, and concluded:

Without highest credit such operations impossible.

Yet the Prisie Minister yesterday accused his critics of having damaged the credit of the country. A few days previously in his Budget he set out to show that New Zealand's credit was higher than that of any country that had gone on the London money market just prior to or after the floating of the last New Zealand loan. No fewer than 16 loan flotations were quoted by him, and he summarised the position in tho Budget as follows:—

It will therefore be seen that the undenvrilors bold largo portions of all these countries' loans, and New Zealand secured a higher price than any of them, even those paying a higher rate of interest than we did.

It will thus be seen that while the members of the Government have been year in and year out attacking their financial critics and charging them with "damaging the credit of tho country," the different Ministers of Finance have been with equal regularity exposing the bogus nature of the charge by declaring that the credit of the country was as high or higher than ever. The truth of the matter, of course, is that the charges hurled at the financial critics are merely tactical' moves to discount their criticism. Criticism, instead of doing harm to the country's credit, really strengthens it._ It affords an assurance to the outside world of an alert and healthy scrutiny of the administration of the country's affairs likely to act as a check on extravagance and recklessness. It is the best guarantee possible that sl community is alive to its responsibilities, and the keener and more active the critics the better the guarantee. One of the things most calculated to damage the credit of a business or a community or a country is (he fear of criticism. New Zealand has no reason to fear criticism, but those in charge of its affairs have. Therefore, it is a part of their system of political tactics to treat criticism of their actions as a reflection on the financial stability of the country. It is not a particularly patriotic thing to do, nor is it a very chivalrous method of conducting political warfare; but it unfortunately has become a part of tho tactics of the Government, and, as such, calls for the exposure which we have given to it out nf the mouth of the Minister of Fiuancn himself.