BRITISH WAR LOANS

Hokitika Guardian, 9 January 1930, Page 8

BRITISH WAR LOANS

A MINISTER’S INDISCRETION. IN IEREST ON DEFLATED MONEY. LONDON, Nov. 28. ; Mr Tom Shaw, Secretary of State for War, lias brought a hornet’s nest about bis ears by his indiscreet comments on the War Loan. When he was winding up. the debate for tlie Government on the second reading of the Unemployment Insurance Bill on Monday he mentioned that Mr Lloyd George had called attention to the growing expenditure and crushing weight of the social services. But, said Mr Shaw under Mr Lloyd George’s Government and under every other Government a policy had been pursued which had led this country into paying at least £100,000,000 a year to people who had not the slightest right to it. During the, war we had money lent to. us at inflated rates; we adopted after the war a financial policy of deflation, and now we were paying interest on the deflated money.' That was a fact that had to be faced before this country could be put on its feet again. We had produced a rentier State and we were paying through the nose. (Cheers) If lion, members wanted a Council of State, there was a tiling to start considering at once. That was one of the things that might be considered in the reviving of' industry. QUESTION IN THE HOUSE. On the following day Mr Snowden was under examination at question time. Mr Hore-Belisha took the opportunity to ask him if he had considered the effects upon the position of the ( new five ,per cent, conversation stock of Mr Shaw’s speech from the Treasury Bench. There was no reply, but the question will be put again later. Mr Shaw’s indiscrition was also brought to mind when Mr Lees, Labour member for Belper, asked for a return of the total amount paid in interest to persons holding £IOO apd over of War Stock and persons holding less than £IOO. fj’he Chancellor answered that it would take six men a whole day to get out the information,, and he did not feel justified in instructing them to do it. “No, certainly I shall not reconsider it,” be retorted sharply when the matter was presseu. “I don’t think that the information obtained at such a cost would be worth it.” “Is he now aware,” added Mr Lees, “that ti e rich are hiding behind the poor wicLw with £IOO or less?” Mr Snowden ignored the question. Sir Kingsley Wood, M. P., has given notice of the following question to Mr Snowden' next Tuesday.— “Whether he will state the n.imber of holders of war loans, the amount nf their holding, and whether the Government intends in any way to interfere with their rights and priveleges.” “Undoubtedly,” said Sir Kingsley "Wood, "Mr Shaw’s statement has a large number of people who, upon the faith of the British Government, have invested in many cases all their savings in British Government securities.”

A PARALLEL. “it is always difficult to bring lioine to tlie mail in tlie street the precise manner in which observations like those of Mr Shaw can disturb confidence and credit,” writes the political correspondent of the “Morning Post”. “Perhaps, however, the man in the street, and the wage-earner will be better able to appreciate the point if we imagine that a Conservative Minister had declared that a number of thrifty working men during the alsnonnally high wage period of the war who had deposited their savings with the Post Office Savings Bank, would only receive a certain portion back again, because in the meantime the ; purchasing power of money had increased compared with the inflation period when they deposited. Tlie matter has only to be stated in that way to reveal what indignation would be aroused on the Labour benches at any such proposal. Yet that is the principle really embodied in Mr Shaw’s observation on Monday.” MR SNOWDEN’S DUTY. •In an editorial, “The Post” says:— “Mr Thomas Shaw, the Socialist Secretary of State for War, may not be a great hand at producing rabbits out of t a hat, but he has evidently a similar aptitude for letting cats out of the bag. His colleagues, the Chancellor of the Exchequer, must be regarding his latest indiscretion with mingled indignation and dismay; for nothing could lie more exactly calculated to make his already difficult task almost impossible. To leave room even for a doubt about such a repudiation of national obligations as Mr Shaw seems to contemplate, not merely with composure, but with eagerness, would be unpardonable. Mr Snowden is bound either to adopt or to repudiate the policy which has been flung at the country like a Millsbomb.” ' ADVICE TO MR SHAW. “Mr Shaw had better stick to his i guns—his other guns—and leave financial bombshells to his eollegues at the Treasury,” says tlie “Daily Telegraph” It is, of course, perfctly true that the value of money is different to-day from what it was in 1917. It is worth more because it will buy more, and if prices fall lower still, money will further increase in value. ‘Morality’ has nothing to do with it. Taxation, on the other hand, has a great deal to do with the interest on the national debt because the higher the taxation the j more difficult will Government find it to convert per cent, loans into c securities on a lower interest level, 1 j

and Mr Shaw might have remembered that Mr Snowden’s latest conversion loan was also at the 5 per cent, level which he finds so flagrantly immoral It is as impossible to write down the fixed interest in the loan as to write it up. W,hen Parliament, after the glorious revolution of 1689, reduced a 6er cent. ‘Bankers’ Debt’ to 3 per cent., it found that it could only raise the nextloans at 7 or 8 per cent.”