LOAN POLICY

Evening Star, Issue 20054, 20 December 1928, Page 18

LOAN POLICY

Nothing Extravagant PREMIER CORRECTS CRITICS [SI'ECIAL TO THE ‘Sl’Aß.'j WELLINGTON, December 19. f£ As thoro may, bo some misunderstanding regarding my policy of borrowing, as enunciated in tho country, particularly in rci'orenco to tbo seventy millions, 1 wish to make it dear," stated tho Primo Minister to-day, “ that at no time have I suggested that seventy millions was to bo borrowed in ono year. A similar impression may have been conveyed in England. Obviously, such a proposal was out of the question, 'as it would so disturb tbo country that no responsible mar. would make such a suggestion. What I proposed was expending, over a period of eight to ten years, an amount up to sixty millions by loan to settlers—an average of from six to eight millions a year; and, for tbo completion of five lines of tbo main trunk railway connections, on which up to ten millions should bo extended during tho next three or four years. The Public Works estimate of tho wholo of these railways is £7,500,000. 1 added tho extra amount for possible contingencies and cost of rolling stock. Tbo sixty millions was for State advances to settlers and primary producers, and for promoting small .settlement, on proper valuations being obtained. REPRODUCTIVE BORROWING. “This is no new system,'' added Sir Joseph. “It was put into operation by mo thirty-four years ago, ami already over forty millions have been advanced in this way, tho profit on which at present stands at £1,500,000, and remains ill the form of a reserve fund; in addition to which there is a sinking fund Tho department has been financially successful from tho beginning. “ Under the whole of tho proposals fo" tho two purposes abovemuned there is no taxation required, as the cost ot tho money is paid entirely by tbo settlers who borrow, and by the working railways, when they are completed as a productive asset, in addition to which tho whole borrowing proposals pioposcd by mo do not amount pen annum to tho average amount tho country has borrowed during tho last three years. There has been so much misrepresentation on tho mailer tb.it 1 feel that It is duo to the British investors, who have always treated this country well, that they should not assume without proper information that there is a policy of extravagance inaugurated. “ I wish to stale definitely that there is no intention on the part of the Ward Government to abuse either its powers or its credit.” THE LONDON MYSTERY. When Sir Joseph was reminded ol public interest in a certain important finance transaction bo found left ovei awaiting bis decision, on taking up office, be replied that bo wished, in tho first place, to slate definitely that those proposals, which ever way they might have been decided by the pre vious Government or by himself, in no way reflected upon the high credit oi tlu country, or its powers to borrow in London, or to keep its engagements. Tlu negotiations, which were initiated from tho London end, came up probably at an inopportune time for easy handling, before tbo General Election. “Tho transactions were under confidential seal, 1 ' said Sir Joseph, “and I was nob myself aware of tho nature of these matters until December IJ, when I took over office, it is obvious that the proposals in no way affected tho country’s credit. They were made before it was known what Government would bo in power. It has been hinted that tbo conversion of the Li-11 maturities was the difficulty. But, while arising out of this, the proposals before mo go much further, and involve a marked departure from what has been tho usual course in London finance; and they did have an important bearing, in my own opinion, on tho policy which tho country endorsed at tho election. As soon as i bad realised this, I had to give very serious consideration to a review of the wbolo position, so as to decide upon tho best course to pursue in tbo interests of tbo country. This 1 have now been able to clear up, and have cabled to London my decision, tho result of which will, when the wholo transaction is completed, become public, as usual. At present tho details cannot be discussed, obviously.”