"BREAKERS AHEAD"

Hawke's Bay Herald-Tribune, Issue 61, 30 March 1937, Page 6

"BREAKERS AHEAD"

Britain Still Deciding ■ Factor LONDON, March 28. "The Economist" in an article on "The New Deal in New Zealand," describes Mr. Savage's Government as opportunist in outlook and eonibining a measure of State Socialism with re-. flationary spending and social betterment. "None of these aims is new in New Zealand politics," the paper says. "The outstanding change has been from ia« direct to direct State control of .ecoi nomic life, increasing .the temptation toj spend public money extravagantly, "The Labour Government needs tha strength of mind to resist this temptaJtion, under pressure from .the constituiencies. It also needs to guard against! excessive advances to settlers, since over-borrowing on mortgage was among the chief causes of the previous infla•tion of land values. -"The guaranteed price system ia even more dangerous. It implies the building-up of a surplus while prices are moderate or high. Much depends on whether the farmerg will toleratei the system in good years when they are able to protest that .they can ob'tain! hetter prices than the Government is! paying. "There may also be financial breakers ahead. Mr. Nash's Budget was orthodox, but if interest rates rise the Budgetary problem will be strained and there will be/ strong pressure from extremists to make the central bank supply 'costless credit.' "The Government also ia anxiously concerned to get a renewal of New Zealand 's trade agreements with Britain. Labour 's new deal will depend in the "long xun on ©sports. In that spheraBritain is still the deciding factor,"; 'The Economist* adds. J