The Dominion. MONDAY, APRIL 3, 1916. WAR FINANCE

Dominion, Volume 9, Issue 2736, 3 April 1916, Page 4

The Dominion. MONDAY, APRIL 3, 1916. WAR FINANCE

The subject of local borrowing for war purposes, upon which tho Minister of Finance and some of the leading South Island newspapers have become involved in controversy, is one that deserves full prominence and attention throughout the Dominion. The main question at stake is. not really complex, and may be stated in very simple terms: "Is it right that the people of New Zealand should be asked in this time of war to economise, and transfer their savings to the "State by way of loan for war .purposes?" Such a question admits only one answer. On all grounds, moral and material, the answer must bo an unhesitating affirmative. A number of reasons mako it right that New Zealand should resort to local borrowing. One is that our only visible alternative is to borrow from the alreadyoverburdened Mother Country, and another .that surplus resources exist in tho Dominion; resources which can be increased by reducing waste and extravagance to a minimum. These facts do not admit of dispute. A practical test is needed to-show what extent of local borrowing is possible jn New Zealand, but it is undoubtedly true that such borrowing is possible upon a considerable scale, and that unless it resorts to raising local loans when it becomes necessary to' supplement the loans which have been obtained from Great Britain this country will be doing less than it should do in the war. Everything else, so far as the purely, financial, question is concerned, is merely a matter of detail. The facts arc" so plain that, it affords cause for astonishment that they have been so neglected by tho National Government. No grcatej contrast could be imagined than is obtained, by comparing the attitude of the New Zealand Government towards finance and related questions with that of the Imperial Government.. The Imperial Government is setting itself to raise the last possible penny of and with an eye equally to taxation* and toborrowing, it is insistently advocating universal thrift on the linos not only of dispensing with superfluities and luxuries, but of cutting down the consumption of, necessaries to the limits of efficiency. In this country our innovations _in war taxation might be called timid; we have done no local borrowing except for public works; and instead of preaching universal thrift in season and out of season, the National Government apparently considers that the subject is scarcely worthy of more than passing' attention or casual remark. It is hot to be pretended, of course, that any close comparison is to be instituted between this country and Great Britain where financial questions are at stake, but except in the matter of aggregate magnitude ofresources distinctions are tending to disappear. The backbone of Britain's future financial strength in the war will be the current sj-vings of tho people, and every shilling that can be saved from ordinary expenditure is needed. This being so, the onlv self-respecting policy for New Zealand is one of self-reliance. Any loans henceforth obtained from tlrc Mother Country will be taken mainly from tho savings, accumulated, or at all events increased, by economics we have . not begun to emulate,

Wo are so-far from having done ourselves justice in tho matter of war .economy and war finance that a late awakening on the part of the National Government might seem to be inevitable and imminent. Such a hope is hardly encouraged by a speech delivered at Dunodin last week by Snt Joseph Ward. It was essentially a defence of the financial policy _ in voguo, and in particular a criticism of the proposal to raise money for war purposes locally. The points emphasised "by the Minister may be summarised as follow:-^

(1) Those in office must have means of obtaining accurate knowledge that those outsido did not possess.

(2) A great deal of what certain journals wore advocating (apparently in the way of local borrowing) had already been done without publicity. (3) New Zealand had not borrowed from the Imperial Government a third of tho amount that Australia had borrowed during the war. (4) Largo future commitments will have to be met in tho way of loans falling due and repayments to depositors in tlie Post Office Savings Bank.

(5) New Zealand war profits are in some cnaes cut' down -materially (even to the extent of tip-thirds) by imperial taxation.

(G) Since ho had occupied the office of Minister'of Finance he had not asked the Imperial Government to lend this country anything tor war purposes, neither had lie urged it to continue tho lending of money to this- country for war purposes. (7) 'The Government would not do anything to weaken any of the financial institutions of the country. It would not absorb, beyond what was reasonable, the savings of the people, or a difficult position might be brought about here alter tho war.

It cannot be said that these various contentions go to make up a very clear case. The claim that the Government has special knowledge is irrelevant eo far nu tha bread, iuefcn of tho financial position in Great

Britain and in this country are concerned. The second contention embodies something of a mystery. As to the comparison between New Zealand and Australia, it appears that the Commonwealth has borrowed) much less, in prop'ortion to pbpulation, from tho Mother Country, than has New Zealand, and it has provided for its future war expenditure out of local, loans. The large future commitments hinted at by Sir Joseph Ward are an argument for, and not against, present thrift and economy, and generally for turning our resources to the best possible. and whatever the operation 6t Imperial taxation may be in connection with a comparatively trifling proportion of New Zealand profits it certainly does nflt deprive this country of considerable surplus resources available' lor local Dorrowing. That the present Finance Minister has not asked the ing. The reason that tho present Finance Minister has not asked 'the Imperial Government for a war loan since- assuming office is, of course, not due to any new policy instituted by him, but' to the fact that the flow of loan money has continued tinder the arrangement made by his predecessor. Tho question now is whether New Zealand should consent to add 1 * further to the burdens of tho Mother Country when there is the alternative of drawing upon her own resources. It, of course, .would be absurd to protend that we are carrying anything like the financial burden per head of population that the Mother Country is carrying. Our war taxation per head is trivial beside that imposed on tho people of Britain, and yet we have just as great an interest in the winning of the war. The total effect of the.Minister's speech is to leave an impression that the National Government is disinclined to adopt a strong financial policy, and aims rather at a minimum disturbance of local conditions than at the free call upon national, resources which, alone will enable. New Zealand to do its full part in the war. If this is its attitude, the Government has completely failed to takeaccount either of the possible margin of saving in this country or of the widespread sentiment in favour of a self-reliant financial policy. Vague fears as to thc_ state of affairs that v may possibly arise in this country, after, the war are not the basis for a sound or a patriotic financial policy at a timo when the Mother Country is straining every nerve and malring heavy sacrifices to meet financial demands. We cannot in honour shirk our fair share of the financial burden any more than we can our fair share of the fighting necessary to win the war.