WAR FINANCE

Evening Star, Issue 23698, 4 October 1940, Page 2

WAR FINANCE

THE DEBATE CONTINUES CPPOSITION VIEW MISTAKE TO GALL UPON WORKING CAPITAL [Per United Press Association.] WELLINGTON, October 3. When the House of Representatives met discussion was continued in the debate adjourned from last night on the country’s war expenditure. Mr Bodkin said that under no circumstances should working capital bo called upon to make any contribution to the war loan, but thousands of companies wore being called on to exchange working capital for a frozen asset that could only be disposed' of at a substantial discount. In this way, he contended, the Government was playing into the hands of the speculator, and would penalise those who had money tied up in industry. Mr Boswell expressed the belief that New Zealand people would welcome the opportunity the loan of making their contribution to winning the war. He was not afraid of the loan being unpopular, and people now, he declared, were in a better position to pay a compulsory loan than they would have been at" any other time in the country’s history. The suggestion by Mr Coates that the compulsory loan should be made on a voluntary basis was surely paradoxical, and Mr Boswell said he was glad Mr Nash_ had not been carried away by any ideas of that kind, Mr Endean referred to the provision in the regulations for appeal to the Minister, and said the Minister was not bound to send an appeal on to the tribunal. He was the supreme dictator whore subscriptions to the loan were concerned, and it was wrong that ho should have such power. In Britain Parliament had set up tribunals independent of the Treasury. Mr Endean urged the Government to pay interest over the whole period, and stated that the costs would be small compared with the huge civil expenditure the Government was maintaining- . , Mr Denham said that quite a few people made fortunes out of the last war and were still living. No one should make a profit out of war. There should be no_ need for compulsion, but the position was that the patriotic feeling and sense 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 people to provide the money. CHAINS OF DEBT. Mr Lee contended that the Government’s compulsory loan would drive the country still further into the, chains of the debt .finance system, and that it did not constitute any new departure in financial policy. Burdens after this war were going to be much heavier than after the last war unless some means were found of avoiding an increase, and he added that to the extent that industry was compelled to lean on the banks to get money to invest in this loan every advance _ by the banks was creating fresh deposits. The debt was going to be shackled upon industry. * USE OF RESERVE BANK. Mr Nordmeyer referred to the use of the Reserve Bank by the State, aud said the bank had already been called upon to find a sum of oyer £27,000,000. Sir A. Ransom: Will you pay it back? , Mr Nordmeyer: X am not concerned about that aspect. (Laughter.) Continuing, he said the Government could extend even further the use of tjie Reserve Bank, and would do so for housing and other purposes. However, the most ardent monetary reformer in New. Zealand would concede that, no matter how anxious we were to use the Reserve Bank and its credit facilities, they could not without disaster extend them beyond the point where goods and services were available. This point had not yet been reached, but after the war, in order to maintain the security and stability of the Dominion, it might be necessary to call on the Reserve Bank to an extent not hitherto availed Mr Goosman said it had taken the Government twelve months of war to make up its mind what it was going to do, and during that period the people had been kept in a state of anxiety. He contended that the Government had taken £27,000,000 from ' the _ Reserve IBank and Mr Nordmeyer had informed the country that there was no intention of paying it back. BORROW IDLE CAPITAL. Mr Goosman suggested that the Government, instead of calling upon persons and firms to advance money to it free of interest for three years, should provide an alternative by borrowing the idle capital itself, and allowing persons or firms to pay interest. Under the present proposals, he said, working capital that was required to increase production was going to be taken. NO INFLATION. The Minister of Native Affairs, Mr Langstone, said it had been contended that there had been inflation in New Zealand during the present Government’s term of office. In his opinion, there had been no inflation, and price levels in the Dominion had remained more level over the last few years than in any other country in the world. Speaking of the standard ->f living ox the people as war progressed, he said it was evident, that if a large number of men loft the country, and those remaining behind did not fill m the

broach so far as production was concerned, then we could not retain tha standard of Jiving to which we had been accustomed. Mr Forbes said that cost had gone up in New Zealand, and there had been inflation. There was no reason why the War Cabinet should not consider methods of raising war finance, and the opinions of the Opposition members of that Cabinet. might ba valuable. He criticised the meshed of raising the war loan, and suggested that the Minister of Finance wou'd receive a better response to his ap if he had adopted methods vo wbicli the people were more accustomed. The debate Was adjourned, and the House rose at 10.30 p.m.