WELLINGTON NEWS

Hokitika Guardian, 17 April 1926, Page 1

WELLINGTON NEWS

MONEY AND LOANS. (Special to “ Guardian.”) WELLINGTON, April 14. 'e The state of the London money marr- ket during the next 3 or 4 weeks will ” lie a matter of considerable interest to c New Zealand because of the fact that i- the Government desires to borrow d C 0,000,000. At this time of the year n money is usually fairly abundant in i- London, but there is a nervousness in c iho market owing to the pending coal u crisis. So far, no satisfactory agreeo ment has been reached, and should all 1 negotiations fail and the coal miners - carry out their threats, then there 1 will bo a very serious industrial upi lieayal in the Old Country, which will 1 upset all markets, particularly the - money market, which sutlers from i nerves oil the slightest pretext. If on - the other hand, the coal crisis is amicably settled, there will he consid- - ornble confidence, and money will Tie - readily obtained. If, as most people - anticipate, a crisis cannot bo avoided, j then the New Zealand Government may ■’ be obliged to postpone the loan operai tion for some weeks, which may cause ; a little inconvenience. It is probable , also, that when the negotiations for i the loan are finally concluded, it will * he found that New Zealand has to pay i 5 per cent for the new loan, as against - 41 per cent for the amount obtained - last year. This will not mean that the ; credit of the country has been in any . way impaired in the ■ interval. It ; would rather indicate that London is unable to lend as freely as in the past. New Zealand’s credit in London stands higher than that of ally of the Australian .States and is quite as good as that of I lie Commonwealth of Australia. New Zealand also has a very good name for the fullness of the information given in the prospectus. The national revenue and expenditure are shown, and generally New Zealand is able to show a surplus of revenue over expenditure. This year there is a surplus of a million and a-half, and that must impress the London moneylender. While this may ho the case the surplus does not, or should not. give satisfaction to the people of New Zealand. That surplus has been derived by taxing the community, anil it is quite evident that we have been over-taxed. The Government could, in its last estimates, have remitted a full million sterling in taxation without in any way affecting the Government services, or reducing salaries oi doing anything vicious. Of course it will he argued that the surplus is gen- 1 orally transferred to the public works fund, and so is put to a good use. That is a plausible excuse, hut not sound reason. Public Works expenditure is capital expenditure, and should come out of borrowed money and not out of 1 taxation. The only cure for this is to : insist upon tho surplus being applied j to the reduction of debt, which is the correct tiling to do with a surplus, and . if this were done, the incentive to re- ; duce taxation would he very strong ' with the Treasury. 1 V ANAMA GOLDFIELDS. Hie reported fabulous richness of Ihe new goldfields in the republic, of , Panama, which owe their discovery to . an adventurous New Zealander, will i not attret many, hut they will attract 1 a few. The significance of the discov- ' cry does not lie so much in the richness of the field, assuming that it is t as rich as described, as in the period , of its discovery. In this, history np- i pears to be following the traditional I course and repeating itself. After the 1 Napoleonic wars. Europe was in a pros- ’ irate condition, financially and indus- 1 f rially, and there appeared scant hope of recovery. Tt was not until the dis- , eovery of Ihe Californian and Austin- s liau goldfields that hope revived. Tho 1 two fields were rich and the adventur- I oils individuals that (locked to the n fields soon turned out the yellow metal il in increasing quantities.- At that time very few countries were on a gold | standard of currency and the enormous | production of gold alarmed economists, who suggested that gold should ho demonetised. May not the new goldfields ( in Panama exercise a similar influence on world trade and commerce. With practically every civilised country on a j gold basis, tho demand for tho yellow ( metal is persistent, and all that may j he produced in Panama will be readily

absorbed. It generally follows .that the discovery of one field stimulates the spirit of adventure and discovery, and may wo not hope that in these connections New Zealand may bo a contributor to the general goods. We have yet to discover how much, or little there is in the Kawarau scheme, which should receive its test very soon. If the beliefs of the early miners are realised, the bed of the Kawarau mustyield a striking store of wealth.