NERVOUS INVESTORS

Evening Post, Volume CXXIII, Issue 133, 7 June 1937, Page 8

NERVOUS INVESTORS

The gold-selling panic in London, attributable to the fear that the price of gold will be lowered, cannot be blamed wholly upon the speculator. It is in part explained by the natural nervousness of possessors and investors who try to guard themselves against loss. They bought or hoarded gold because its value seemed more stable than anything else. They are selling now because there are rumours of reduction in value. While some may have hoped to get rich quickly, the majority have probably acted from the same motive as.the prudent housewife who lays in a stock of goods when she hears prices are likely to rise. An illustration of similar nervousness is given in a report (printed in our news columns today) of a fall in the price of New Zealand stocks on the London exchange. The report is by a writer in the "New Statesman and Nation," a paper which is not anti-Socialist, but inclined to Radicalism and especially inclined, like St. Paul's Athenians, to some new thing. The article cannot, therefore, be dismissed as hostile propaganda. The writer attributes the decline in New Zealand stocks to the conservative investor's dislike of Socialism. The description given of the New Zealand Socialistic plan is inaccurate in several particulars. It states that the Government's scheme involves the writing down of mortgages and rents; but it does not explain that this was begun before, and that the Labour Government has only accelerated and extended the scheme. The article further states the scheme involves guaranteeing the purchasing power of all employees. It does not, as the minimum wage! includes no guarantee that the worker can find employment at that wage. Again it is stated that the banks are to operate on the basis of cost but no profit, a statement for which there is no present warrant.

The "New Statesman" writer points out that the security of New Zealand Government stocks depends upon trade, which is good, awl reserves which are ample, ratHer than on political intentions. For this reason there is little cause for nervousness on account of policy. The conservative investor, however, does not reason this way. He sees something disturbing in the distance and does not wait for its effects to become manifest. This habit of mind must be remembered by those whose business it is to maintain New Zealand's London credit.- It is not enough that they should refrain from doing unsettling things. They must not even talk about them. In this connection the striking fact regarding the "New Statesman's" inaccuracies is that they largely express, not what the Government has done, but what some supporters and friends of the Government have urged or said would be clone. The writer on the other side of the world has confused the Government's actions with the wishes and intentions of supporters. The lesson is obvious: that the Government and New Zealand are likely to be gravely harmed by those who advocate extreme courses. The investor at a distance cannot inquire particularly what authority or importance attaches to the advocate of extremism. He prefers to sell and take no risks.