WAR FINANCE

Dominion, Volume 36, Issue 17, 15 October 1942, Page 4

WAR FINANCE

Taxation, Inflation Or Loans

ONLY THREE WAYS SEEN

“There are only three ways of financing this war—‘by taxation, by loans or by inflation—and the lastmentioned would be almost as bad as having the country overrun by its enemies,” said the governor of the Reserve Bank, Mr. W. F. L. Ward, in an address last night on the second Liberty Loan.

A total of £1 i,i>oo,ooo of the £27,000,000 which it was necessary to raise for war purposes this year had already been siubseribed, leaving £10,000,000 to be found by way of the second Liberty Loan. The amount need not stop there. “In fact,” eaid Mr. Ward, "the snore there is contributed now flic loss will have to be found for future loans; for this will not be by any means the last war loan that will have to be raised in New Zealand.”

Bank returns showed that there was ample money in Now Zealand to finance the loan many times over; so that there was no excuse at all for failure to subscribe the amount required. Everyone should examine his finances closely and put into the loan all he possibly could. “It may hurt now —and hurt still mora.as we go on —but it has to be done. This is going to be a crucial year, so we must, if necessary, ‘be prepared to tighten our belts,” said Mr. Ward, "for we cannot let our boys down, nor the Empire nor .our Allies. They are all doing splendid work, and it js up to us on the home front to do likewise.” For those people who could not find the necessary amount of [money, arrangements had (been made with the trading banks to assist, to the utmost. They would make advances up to 90 per cent, of the amount subscribed to the loan. If a man wished to subscribe £lOO, he paid down £lO now and the banks would find the rest and charge interest on the day-to-day plan at the low rate of 3J per cent, per annum. The subscriber would have the right to repay at any time within six: months. It was necessary to make the term fairly short, otherwise the tendency would be inflationary. Repaymentl was to be inmde at the rate of 15 per cent, of the amount subscribed for each of the six months. At the end of that period the loan would be fully paid and the bond or inscribed stock handed over by the bank. The loan could be taken up in inscribed stock for amounts of £lO and more, in death duty stock for amounts of £lO and multiples thereof, or in stock certificates, generally known as bonds, which were transferrable, by hand. These had interest coupons attached; but.there was a limit on the minimum amount of these bonds that could be taken up and that was £5O and multiples of £lO thereafter.

Stream of Applications.

Though no figures are yet available a steady stream of applications for investment in the Second Liberty Loan is reported from banks and post offices, anil it is apparent that the small 1 investors are active. Largo investments reported so far are: Gear Meat Co., Ltd., £5000; Whitanui, Ltd., £4000; Salmond and Spraggon, Ltd., £3500; Amalgamated Brick and Pipe Co., Ltd., £3000; Aubrey Gaulter and Co., £1000; Wellington Concrete Pipe 00., Ltd., £1000; N.J}. Institute of Surveyors, £500; N.Z. Amateur Athletic Association, £4OO.

Representing ail arms of the service, the military parade postponed from last Monday wi.il move off from the Wellington railway station at 12.30 p.m. tomorrow, passing along the main city streets. The column will be led by a visiting sei-’ vieemen’s band of 68 instruments. ■ At 1 p.m. the same day a rally will be held at Liberty Corner, Featherston Street, where an attractive programme will feature Art Rosman and the Melody Makers, with vocalist Jean McPherson, by courtesy of the National Broadcasting Service. This well-known band will play popular numbers, and the publie will have the novelty of hearing a dance band outdoors;

"Minute speakers,” representing various sections of the community, will appeal for support for the Second Liberty Loan.