The Evening star THURSDAY, SEPTEMBER 26, 1940. A WAR LOAN.

Evening Star, Issue 23691, 26 September 1940, Page 8

The Evening star THURSDAY, SEPTEMBER 26, 1940. A WAR LOAN.

Ik a statement at Wellington last night the Minister of Finance explained the arrangements that had been made-for the issue of a war loan. It will be noted that the word “ compulsory ” is avoided. In a naive explanation on this point a few days ago the Minister of Finance said it was a misnomer to call this war purposes issue a compulsory loan. It would become compulsory only when it had been found that individuals expected to contribute had failed to respond. Thus Mr Nash revealed an unsuspected sense of humour. There was a natural anxiety felt as to the terms of the war loan, especially by those people forming the smaller income group, for the calls on their resources when they pay income tax next February will be much heavier than in the past. It will be a relief to these individuals to read the words “ less fifty pounds,” which means that they are generally exempt from the obligation to contribute to the loan. Many more would have had to pay if the calculation had been based on this year’s income tax, which will be substantially higher than that of last year. The requirements will fall much more generally on companies. Thig ia unfortunate at a time when, the Government is urging industrial expansion and development, for they will be cramped in this direction by the additional impost on their resources. No interest accrues to the lenders, it will be observed, in the next three years. Thereafter, until October 1, 1953, when the principal is repayable, interest will be allowed at 2J per cent, per annum. Concessions are very properly made to persons who have already contributed free-of-interest loans or have made gifts to the War Expenses Account. Looking at the proposals broadly, it would appear that the Government has adopted the wrong procedure in its war finance plans. It would have been better if at the start Cabinet had decided on an ordinary loan, at an interest rate, say, of per cent. This would have drawn in from certain concerns larger amounts of money that is lying idle, relieving other business enterprises which can only contribute at a disadvantage to development. This may be done later, for in his Budget statement Air Nash spoke of raising loans in a form suitable for ordinary investors, and added that provision would be made to enable the rank and file of the people to do their part by subscribing small amounts at regular or irregular intervals as best suits them. Air Nash referred to these points in remarks recently made at Christchurch, when he said that funds for war purposes would be raised in three different ways—by a war purposes loan, by a savings scheme to meet the needs of small investors, and by an internal loan. New Zealand’s war expenditure during the present financial year is estimated at £33,000,000, and the principle on which the Government is working, as explained by the Atinistcr, is that some portion of the amount required to meet the expenditure abroad must be found in New

Zealand, thus relieving the drain on the resources of the British Government. To this announcement no objection could be taken, and it will give satisfaction generally that the proceeds of the loan will he used solely for equipping and maintaining our armed forces in the Dominion or overseas and other war purposes. The method of raising compulsory loans is not new. It was employed by tho New Zealand Government in the last war, and in tho great conflict now raging tho calls on this country’s resources, which will be cheerfully met, arc likely to be greater than on that occasion. Britons arc facing the biggest test hi their history.