Hokitika Guardian & Evening Star MONDAY, JUNE 7th, 1920. FAVOURABLE BORROWING.

Hokitika Guardian, 7 June 1920, Page 2

Hokitika Guardian & Evening Star MONDAY, JUNE 7th, 1920. FAVOURABLE BORROWING.

It is interesting to note, at this juncture that both the New South Wales and Now Zealand Governments are about appealing for loan moneys. In each case two millions are being asked •for, but there the similarity ends, for the New Zealand loan is to be on much more favorable terms. The New South Vales loan is to be at 6J per cent, and will have a currency of five years, interest being free from both the Federal and State income taxes. The New Zealand loan is to be issued at 5 . per cent for a term of ten years and will not be free of income tax as affecting the interest. This comparison is quite I to tlie favor of New Zealand, and the | terms indicate the sound financial nosition of the country. In the United States in March last money was very tight. According to a.banking record there was little prospect of it being otherwise. In New York time money on collateral loans was commanding 8 to 9j per cent; while owing to the usury law regular loans to customers were restricted to 6 per cent. Air Massey told a deputation at Wellington that money was plentiful, it was paper money and not gold; and he added significantly: “There will be no more paper issued' while I am here. There has been too much issued.” The financial position, of necessity, must, be handled very circumspectly, and in answer to a question, the Minister of Finance said: “If I withdrew the paper we would have a crisis here. We have to wait until it is withdrawn in England. It must he done gradually.” The ecenomic situation cannot be played with, it requires most careful handling. In putting the present. loan forward, Mr Massey is not going to strain tlm financial position unduly. The terms are fair, and the money is for the. betterment of the country—it is required for public works only. In subscribing to the loan, the contributions will he directly helping the Dominion by carrying on its public works efficiently and uninterruptedly. The amount of the loan is of modest dimensions, hut we must not forget a large loan •is to be placed on the market later. That will be required for various public services, no doubt, as well as to j replenish authorities such as loans to stldiers etc., and a very large sum is required for redemption purposes during this financial year. For this and tho succeeding three current financial year over ton millions of borrowed money falls due and has to be arranged for. Next year there are over six millions, the following year over nine and in 1924, over eight and a half millions. • The financial position will require constant attention on the part of the Minister in charge, for over seven , ' millions has to he found each year for interest alone, without proriding For sinking fund. Five per cent proposed to be paid on the new loan is the maxiTiium rate yet paid on Government loans and the rate of interest is not likely now to fall much below that. The Government borrowing will tend to make ( money dearer, and tho position will ho uncertain till the full Government fin- ( . nncial policy is revealed. These arc _ certainly more stringent .times ahead all round, and at the moment the Go- > vernment is making its effort at the most favorable period immediately prob- j able for local borrowing.

When speaking on the coal production question last week, the Prime Minister went on to say that owing to the decline in the production of hard coal and the frequent stoppages in the source of supply, industries generally have had to depend on regular weekly shipments. “In this connexion,” Mr ' Massey said, “tho geographical position of tile West Const mines is ft veiy 'important factor, inasmuch as all ionl : produced lias to be transported by sea, so that any delays to shipping due to 1 the bars being unworkable, bad weather at discharge ports, or other causes affecj ting the movements of steamere, result j in industries and other services being l placed in a serious position for supI plies.” When the Midland railway is completed these special troubles will, disappear; the coal can always come ' without any delay from the West Coast ■ pithead to the yards in Christchurch or the ship side in Lyttelton. Mr Massey I here touches on the particular reason ! why the Otira tunnel works should be speeded up to their utmost possible lini- , it. The fact that the works are still ' dragging along is not creditable to the Government which two years ago when th.e tunnel was pierced, promised to have the-line running by next August! Tlie “two years” for completion are [ still ahead of us apparently, and in view of what the Premier has lately stated he should be urged to speed up tlio

completion with all possible despatch. For years now the local bodies have been urging the Government to get on with the electric plant for the working of the tunnel, and 1 it is believed that the plant has been ordered but recently while the complete and final scheme for working the line has not been resolved oil fully yet. It is a /great shame that a national work of so much importance as the Otira Tunnel -should be played with in this way. The country is paying very dearly for the bad management of the Government in this 'matter.