WAR LOAN

Evening Post, Volume CXXX, Issue 83, 4 October 1940, Page 4

WAR LOAN

RAISING OF MONEY

METHOD OPPOSED

POSSIBLE RESULTS

Objections to the method adopted for raising money for war purposes were again expressed by members of the Opposition in the House of Representatives yesterday, and it was contended that the compulsory nature of the loan would force investors to sell at a loss to tne advantage of speculators.

Mr. W. A. Bodkin (National, Central Otago) said that under no circumstances should working capital be called upon to make, any contribution to the war loan, but thousands of individuals and companies were being called on to exchange working capital for a frozen asset that could only be disposed of at a substantial discount. When those assets came on to the market the man with bank assets who had invested in the loan could buy other shares at such a heavy discount that he would be able to average out at a reasonable price over the period. The Government was playing into the hands of the speculators and would penalise those who had.money tied up in industry. CHANGE OF POLICY. Why had the Minister of Finance suddenly changed his policy regarding the payment of interest? Mr. Bodkin asked. He had changed because of the member for Grey Lynn. At' every Labour caucus the Minister was pestered by members of the "Left Wing" who told the Minister that he would have to find interest-free money to save them from being torpedoed by the member for Grey Lynn. The belief was expressed by Mr. C. W. Boswell (Government, Bay of Islands) that the people of New Zealand would welcome the opportunity the loan presented of making their contribution to the winning of the war. The people, he declared, were in a better position to pay the compulsory loan than they would have been at any other time in the country's history. PROVISION FOR APPEAL. I Mr. W. P. Endean (National, Parnell) j referred to the provision in the regu- j lations for appeal to the Minister, who, he said, was not bound to send j the appeal to any tribunal, and even if he did he still had full say. He was the supreme dictator where subscriptions to the loan were concerned, but it was entirely wrong for the Minister to usurp such functions. In Britain Parliament had set up a tribunal that was independent of the | Treasury. Mr. W. M. C. Denham (Government, Invercargill) said that quite a fewpeople had made fortunes out of the last war and were still living. No one should make a profit out of war. In his opinion the people of New Zealand should have subscribed voluntarily the money required. There should be no need for compulsion, but the position was that patriotic feeling and sanse of principle was not so deeply implanted in the hearts of some people as it should be and the loan proposal had been introduced to compel the people to provide the money. The Government's compulsory loan would drive the country still further into the chains of the debt finance system, said Mr. J. A. Lee (Democratic Labour, Grey Lynn). The proposal did not involve a new departure in financial policy. Under the National Government in the last war, debt was being created; under the Labour Government this time, debt was again being created. To the extent that industry was com- j pelled to lean on the banks to get the I money to invest in this loan, every advance by the bank was creating fresh deposits. Debt was going to be shackled upon industry. I USE IDLE CAPITAL. j The suggestion was made by, Mr. .W. J S. Goosman (National, Waikato) that the Government, instead of calling j upon persons and firms to advance i money to it free of interest for three' years, should provide an alternative by borrowing idle capital itself and allowing the persons or firms to pay I the interest. Under the present proj posal, Mr. Goosman said, his opinion ! was that it was the working capital that was required to increase production and help industry that was going to be taken. j The Minister of Lands (the Hon. F. Langstone) said that it had been contended that there was inflation in New | Zealand, but in his opinion there had j been none and price levels had remained more stable over the last few years than in any other country in the world. As far as the standard of living was concerned, it was evident that if many thousands of men were taken out of the country and the people who were left did not fill the breach and maintain production, the I standard must fall. The Rt. Hon. G. W. Forbes (National, Hurunui) said there was evidence of inflation and costs had increased in many ways. He could see no reason why the raising of war finance should not be considered by the War Cabinet. If the Government had started with a voluntary loan it would have got a good response.