The Guardian AND EVENING STAR, With which is incorporated “ The West Coast Times.” SATURDAY. APRIL, 1921. THE WEEK.

Hokitika Guardian, 23 April 1921, Page 2

The Guardian AND EVENING STAR, With which is incorporated “ The West Coast Times.” SATURDAY. APRIL, 1921. THE WEEK.

With the Minister of Public Works curtailing the expenditure on roads and bridges, probably a closer attention than before will be turned to Dominion !inance. In regard to the general subject of New Zealand finance, an informative review of same and a comparative relcrence with Australian finance, is made by the financial editor of the Sydney Herald, which is not without interest at this juncture, and is nab lished accordingly in extenso as follows : A stringency of money is living experienced in New, Zealand, just as it is being experienced here in Australia. The primary cause is the same in both cases. In New Zealand, as in Australia ther has been an immense flood of imports. The exports in the last twelve months have diminished. The decline in exports was accentuated by the waterside strike of some months ago. That delayed the getting away of New Zealand produce, and during the strike prices tumbled, so that the value of what was subsequently exported, not under contract, fell. What saved the situation in Australia was the bumper harvest of this year. In New Zealand there is no exportable surplus of wheat. Further, New Zealand wool, being cross bred, is almost unsaleable at the present tints. The bulk of Australia’s best merino wools has been sold, and that, too, has helped the financial position here. Now Zealand is a great exporter of meat, but the meat market is dull at the present time. She has done well out of her butter, just ns Australia has done. In these conditions it has been necessary to find a lot of money to pay for the heavy imports at it time when the primary producers, because their products could not he marketed, had also to be helped hv the banks. Thus the hanks found many demands on their resources. These demands have been freely acceded to, but any demands for accommodation to start new enterprises or to indulge in speculation have been looked at askance. It has even been a complaint that hanks have refused accommodation which was asked for to enable the borrower to pay his income tax, which in the case of large income seems to he heavier than in Australia though this assertion is disputed by the Premier, Mr Massev.

No doubt excessive taxation contributed towards the stringency. Last financial year income tax was collected ;tom New Zealand to the amount of £6,500.000, against £19,396,000 collected in Australia by the Commonwealth and States from practically fire times the number of people. Heavy as Australians know their tax is, if New Zealand l ad been taxed on the same scale as Australia, the people of New Zealand would have paid about £2,600,000 less in

taxation, or 40 per cent. less. They are now feeling that taxation, though

■ it may result to their advantage later nil when because of that taxation, there will be less loan money to renew, j Perhaps, too, compulsory loans have had -something to do with the financial strin- - genoy. Though it was just in war time | that all persons should contribute no-' | cording to their ability to the loans

raised for the war, and though during such a period a great deal may lie said ; in favour of compulsion, it may be that compulsion was too harshly applied and applied indiscriminately, with the result that firms and companies whose capital and credit were fully employed in carrying on their business, which was not only in their own interest, but in the interests of the country, were compelled to mortgage them credit still further in order to t.-ko up war loans.

; Another cause of stringency has been ; brought about by conditions which operate only to a small extent in Austrn- : lia Tn New Zealand it is a common practice to deposit money with firms, ; companies, and local corporations, bej cause such institutions give a higher Irate of interest than do tjie hanks,

The practice has attained dimensions never experienced here, eveii iii the boom days before 1893. It was the trading on such deposits, it will be remembWed which brought about the collapse of the building societies in the early Nineties of the last century. In New Zealand all descriptions of institutions receive money at call and on deposit for short terms. It is a favourable form of investment, for co-opera-tive dairy companies, among others, because of the higher rate of interest. Recently the institutions so receiving money on deposit have found that withdrawals have far exceeded payments in. Whether the withdrawals were due to the depositors wanting money for their own business, or because they had their fears aroused because of the financial stringency is not clear. Probably both causes were contributory to the demrnd on the receiving companies, firms, and local bodies. But the deposits so made were used in the business of the local bodies and other institutions, and the sudden and excessive withdrawals unless money could be found to take their place means, at the best, a curtailment of business. So the local bodies, firms, and companies affected had recourse to the banks, calling upon them to make advances. The banks perforce had to grant the accommodation in order to keep up the applicants and the drain on the resources of the banks was becoming so evident that the quantity of ' credit available for the ordinary course of commerce was threatened. lln these circumstances very drastic ! legislation, to which reference was made | two weeks ago in these columns has 'been enacted in New Zealand PaiHa- ' ment has been considering a Mortgages ; Extension Bill, whose object was to ex- ' tend the moratorium of mortgages. On March 21 the Premier brought down to the House of Representatives amendments to the bill, providing for the extension of the due date of money deposited with local bodies, companies or firms, other than banks The amendments in no way affected money held by banks. That money will be operated on by the customers of the banks as before.', liuti with regasrd to-the mou-

rn eys held by the bodies specified, the amendments providing that all such deposits including money at call, should [ ' be extended as to the due date until ’ May 31. The Premier, in proposing the amendments said that it was well known that there were immense sums deposited with such bodies at c<dh in most cases, or for short terms, ft was impossible to say what those sums amounted to. but the total was probably « many millions. , The effect V-'as that when the depositor went to a firm or s other body holding the money and in--1 timated that, he wished to have it back, ! the firm went to the bank and obtnin- , ed the money to pay the depositor. 'Hie consequence was that not enough money was" remaining to meet the ordinary business of the country. Extending the due date to May 31 would ’ give the concern that had received the , deposit time to consider what should be done in the matter and then another 1 amendment provided that, any of the bodies concerned might before Jf.w 31 notify the depositor whether it reqwrcd a furtlieV extension of the due date tc/ Dctjemb'er 31 next, but only on 1 undertaking to pay 1 per cent, above 1 the rate of interest. In cases of hardship the depositor could apply ‘o a " Judge of the Supreme Court, and the Judge could do what he thought right. 3 The bill without amendment was pass- ■ ed through the House of Representn- ' tives the same day, and later passed through the Legislative Council. That 1 such a condition of affairs could come into being shows laxity on the part of the Governments, past and present, of ' New Zealand. It would seem, in spite I of all the lessons of the past, that there • had been no restraint on anybody ass suming the function of a banker. In ■ New South Wales any company receiv- ' ing money on deposit, whether • ueh 1 company be a hank or not, has to make 1 n quarterly return of its average as* t nets and liabilities of the quarter under - review. Thus is known how much mon- ‘ cy is on deposit. It is known that a t few firms here do receive deposits. Their - statements are published in the “Goi vernment Gazette,’’ together with those - of the banks. If companies receive de- ■ posits, and do not make returns, they i ae liable to a fine of £SOO. We know, ; too, that the City Council receives I money on deposit. It might be well, to extend the operation of the Act to all public bodies reciving such moneys. Tiie financial pinch which Mr Coates, Minister of Public Works is passing on to the local bodies in regard to the curtailment of grants expenditure, has reached here already. This extra stringency is coming at a very unfortunate time, and will impose hardships all round. Mr Coates began so well as Minister of Public Works, and earned such general praise, that it is to be regretted his record is rather to be marred bv a set of circumstances quite outside his control. As the saying goes lie can not be expected to make bricks without straw, or to carry on public works without funds. At the same time it is not clear that the Public Works Fund is at a low ebb. The latest announced figures do not show it to be so, while Mr Massey before leaving our shores, took a very bright outlook of the finances. , If the real position is as the action of - the Minister of Public Works indicates, j then Mr Massey cannot get Home too ; soon and arrange for the new loan. The Premier of New South "Wales lias been | successful in negotiating loan money in Britain to enable New South Wales to carry on, so we take it Mr Massey ; with the prestige of the Dominion behind him can succeed where Mr Storey , has. The price is of importance, no doubt, but the money seems to bo so urgently required, that in the end the stern demands of necessity might leave the prive of comparative importance. The shutting down of public works no the present juncture will have a disastrous effect in regard to employment, hundreds of oversea, people are arriving in the Dominion looking for work. There is the promise of a hard winter ahead for casual employees, and Mr Massey’s advice ‘‘to stick to your job,” was certainly pregnant with meaning. It is doubtful if the restriction of pub- ; lie works can be of short duration. Tf there were an early possibilty of funds being available, a large employing T)e- 1 partment would hardly dislocate indus- ■' try for a brief term. The fact is the : wave of depression in trade combined 1 with the financial stringency is going to t have far-reaching effects, and the conn- I try will have to endure as best -t fan J

the straightened circumstances in which it now suddenly fiml9 itself v . One of thij last acts of the dying Bor- • ough Council was to authorise “an in- ( i formal poll” on the question of a loan ( i for a municipal theatre. This seems a • very stupid move at this juncture—i getting nowhere. An “informal” poll i ■ can have no positive effect, whatever 1 ■ the volume of voting, and as the pro- f • posal is put to the ratcpowers, is not ■ any test of the question. The proposal ’ is bald and unconvincing. There is no , - outline of policy; nothing to indicate • site or design of the proposed struc- -> ture; and above all, no information as , >' to its possibility of being anything ■' other than a white elephant. We are 1 -anxous to seo municipal enterprise en--1 tered upon, but desire it to be on us*1 ful, not to say necessary lines. As to ‘ a building of the character suggested, c circumstances do not warrant such a ' place—at all events to be financed by 0 the ratepayers. If such a proposition ; s had prospects of paying its way, it r would have been undertaken long ago by private enterprise. Such a step has l > been mooted often, but the 0 capital has never been i'orthe coming to finance what is under 0 tile circumstances, a wild cat proposal. 0 As it is the Borough has a very ornate " own Hall in existence already. That ' building can be put in first class repair and condition for three or four hundred pounds at the most, and would last the ! town another couple of decades. It is I a, building fully equal to civic requiremeats, and if abandoned by the Council for n municipal theatre—what would . become of it ?—other than to fall into kS | decay and become another eye-sore. The ._ j loan proposal now on the tapis is inden I finite and quite inconclusive. To sanco j lion the proposal would be like buying l_ I a pig in a poke. The site contemplat- . ed is unknown; the liability to the i- ratepayers is not disclosed. We quesr tion in any case whether for such a pur- j - pose the Council could raise the money j :1 at interest less than 61 or 7 per cent. - To think of building on these inade- ' s quately stated proposals shows how ill- ( - digested the matter is, and it is only a. e j waste of the ratepayers’ good money - to take a poll under such conditions. !,- I If the authorities are wise they will at I once withdraw from the steps contom- ! e plated and save the cost of what in any i II case is a futile action. s 1 We read the other day in a contem- ( s , porary—which by the way Ims a kink ■ i apparently in its desire to belittle the ' British Empire, and all that pertains to k it that Mr Lloyd George was “endea- 1 vouring to dodge responsibility.” This 1 ‘ was both untrue and ungenerous. If ’ there is any outstanding attribute in the ’ : statesmanship of Mr Lloyd George—our ' ) greatest national asset—it is his per--1 | sonnl courage. His whole political life ’ j has seen him devoted to the cause of | the people. The last- seven years of . his life have of course been the most ! | notable. For that trying and crowded period, lie has been a tremendous force not only in the Empire, but in ‘ j the world. Responsibility has been j heaped upon him, and it can never be said with truth that he has ever attempted to dodge the* burden of the s heavy yoke. As a Minister, he went from Department to Department where there was work most necessary to do—- ? j and did it. Was it stabilising finance; .he was the man for the job. Was it i the supply of munitions; his was the responsibility to see that they were j produced on a scale previously undreamt of. Was it a matter of carry- , ing on the war, and finding the men j- for the job; his ngain was the task to f produce the marching millions. And , so on through the whole gamut of those , four arduous years of warfare—he was ' the Minister to wear through it all; , seeking, not dodging responsibilities in order that Britain might win, and the , world he made safe for democracy. And , after the war his task was no less nrd- . nous. In every phase of the peace . overtures, he was the man looked to to . solve difficult propositions. He it was who had to turn from one grave duty to another. From peace overtures ' to the settlement of a- strike at Home; from large European questions to the Irish question. He was beset by problems on every side and the marvel is that ho lias come through so well. He has been a God-gifted man, with a ' marvellous manner and methods which carry him through all crisis, The nation has call to he thankful that there 1 is such a one a. 4 he of and for the people, and bent solely upon working for the good of the nation.