The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, FEBRUARY 16th, 1925.

Hokitika Guardian, 16 February 1925, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, FEBRUARY 16th, 1925.

FINANCIAL REHABILITATION. The disposition of the capital of a nation lias a direct bearing on the continued prosperity or state of trade existing in that country. Obviously, while this may be accepted as a general truth, says a commercial journal, it cannot be reduced to a rational mathematical figure. Its importance is accepted now as never before, with the world looking ahead for the means through which commerce, domestic and foreign, may be promoted. In Great Britain particularly the subject is receiving expert attention, for Great Britain is concerned perhaps more than any other nation in holding old markets and opening new oes. The United States also has an interest in the question, for the surplus wealth of the Republic must do its portion of the work in rehabilitation. In a broad way it may be said: that in the past years

Great Britain has iinanced the idfairs of the rising countries of the globe. To her the world still looks for a resumption of this task, although in the effort- she must have assistance, and that for the moment appears to be possible only from one Source, namely, the I’nited States. The Republic lias been engaged so .sedulously and successfully in developing domestic resources that foreign investments have been a secondary consideration, and quite pro--1 erly so. Now the situation has changed, It would be wasting time Mid space to go into the details. 1 bey are familiar to all. The repeated applications in the New York market lor foreign loans is a surface indication of what this change means trom the standpoint of shifted capital, it is to he doubted, however, if the bearing of the export of capital from America on the future well-being of her own people is as clearly realised. In England this same subject as applying to home affairs is a loroniost point of study, lienee we find leading economists, great bankers and all sour-

ces of expert opinion discussing it. The figures of national income are carefully analysed and charted, sub-divided and dissected, in an olfm‘t to show how milch surplus home capital may be spared for overseas loans. 'I heir iu(ideil.e and influence on home trade •ire weighed candidly and no doubt accurately. Without going into minute details- although they ale humanly absorbing. contrary to the general bclicl in the soporific qualities of statisticsthe consensus is that England has availaide for the world at large quite an amount of surplus capital currently created—some C 139 to £l5O million looking after home needs. The amount is less than before the war, or no

greater, hut an improvement is predicted for the future. There exists in •England a s: hold of thought headed by Mr Keynes, which professes that over-

seas investment j'uis been overdone, that the time lias arrived to pay more attention to home needs. In dealing with the much discussed necessity ol exports, the Keynes theory is that cxpnits of themselves are of no benefit. as such, unless they are returned in the shape of consiinimalile imports or are so invested as to produce annually a return equivalent to that obtained at home. There may be truth in this but is presupposes a condition of shortage of capital at home, and that situation England -is unwilling to affirm.. The Midland Bank of London, dealing with the question well asks: '‘Why then, with such a reduction in the available amount of capital, does so large an amount continue till o w out cf the country ; j ” and answers the query as follows: “In the first place it must he remembered that new countries, dealing with practically untouched resources, can assure a great-

er return on investments than more highly developed areas. This fact, amply illustrated by the outflow of funds to the United States in tile latter part of the lfitli. century, is borne witness to by the recent disinclination of Americans to purchase foreign securities and is further emphasised by the continuous outflow from, this country to •South Africa and Australia.” The h:i 11k adds other causes; but it strikes a real truth in summing up when • it says: “Any assistance rendered to potential customers in the shape of capital investment improves the prospect for future profitable trade with them, a statement which is equally true whether applied to old customers underlying iregeneration or to new customers not yet arrived at the adult- age ol consumption.” At- that Lngland fully realises the necessity of hacking home enterprise, even though it may not he in the' favored position now to hid as high lor capital as more fortunately located borrowers. One fact stands out so prominently that it really obscures in part the other points of discussion. That is, that England and America have on their hands the job of financially rehabilitating the world.