WELLINGTON NEWS

Hokitika Guardian, 4 December 1928, Page 2

WELLINGTON NEWS

CREDIT AND ITS USE,

[Special To The Guardian.]

WELLINGTON, December 1

Practically every member of the community has some measure of credit, some more than others, and this credit is being drawn upon at all times by some sections of the community. Money is borrowed and used in various ways, mostly in reproductive works. It seems to-day that the world is in greater need of credit than ever before for a variety of reproductive purposes, Every country is making use of its credit and borrowing freely. All the European countries have been borrowing, some from Britain but most of them from the United States. The Government of the latter has not been borrowing ll'or it has no need, but the individual members of the community are making the fullest use of credit. The instalment plan is. one outstanding instance of this. The feverish activity on New York Stock Exchange is due to the freedom with which share and stockbrokers are able to obtain credit from bankers and others. ,ln midOctober such loans totalled about £1,000,000,000, and this is an instance of credit being used for unproductive purposes. The losses secured by brokers on the New York Stock Exchange are being used for speculative purposes and are of no use to the community. The European position is different. Tnere is a scarcity of funds there and the countries are borrowing from any other counrties willing to lend, and the United States is the principal lender. Europe dissipated its wenlth during the war and is now obliged to pledge its credit to maintain capital for reproductive works. The worth of the credit of a country is expressed in the interest it has to pay on its loans. Peru boirowed in London recently and was obliged to offer 7 per cent inteicst, while New Zealand raised a loan in London in May last and the inteiest, including redemption, was under lour per cent. That New Zealand s credit stands high is Ifortunate. but what is the good of our credit standing high if we shrink from borrowing and making use of the money

for legitimate purposes. This appears lo have been the opinion of the general body of electors, although most of us were unconscious of it. The Hcfnrm members reiterated the truism that New Zealand’s credit stood high in London and expected the l electors to send them to Parliament on the strength ol that fact. It was a statement and not a policy. The l nited Party admitted the high standing of the (oiiiiiry ami suggested exploiting the credit for the benefit of the nation, and hence the sensational success ol the Unitods. To exploit our credit and to make the best and most legitimate use obit is our duty in the present circumstances, and a good many ol the electors were apparently of that opinion. We have not the capital to develop our resources and must therefore make use ot our good credit an I borrow to lend to the people through the Advances to Settlers’ Ofliee. 1 his of course is invading the hanking vwirld and on that score there may be very strong objections to the State indulging in hanking business. On the other hand it is pointed out that the Ativan ces Ollice has been operating for tliuTv years, and according to a statement made by the Hon. Downie Stewart, the office lias operated at a protit and is doing as good work as any private concern. It is claimed that, farmers and others, and particularly farmers, are in need of funds for the development ol their properties, and the housing problem is still a serious matter. II the funds needed for that purpose could be obtained privately, then there would 1 e no justification for the State interfering in the matter. But the country has not available the volume of money required for this purpose. This apparently is the justification for the State finding the money. Unemployment is direetTv due to the fact that the country cannot employ all employable men and women. Exactly as a man’s power to employ labour depends upon the vol- | ume of Ids wealth or capital so does- a I community, we must, i'f we desire to develop our country and make people prosperous, happy and contented, con- ! vert our credit into capital and spend the capital judiciously, economically | and for reproductive purposes. It may bo contended that building homes lor the people, or helping them to d" so for themselves is not reproductive, hu* this is scarcely a correct view, lor building homes as indicated is not directly reproductive, hut they are so

indirectly. These views were gathered in conversation with a business man.