WELLINGTON NEWS

Hokitika Guardian, 13 November 1931, Page 8

WELLINGTON NEWS

‘ CREDITS AND DEBTS. (Special Correspondent). WELLINGTON, November 10. The finance of Socialism is quite a simple affair, for briefly stated it amounts to this “Pinch the pocket of Peter in a legal way and give it to Paul in a somewhat illegal way.” The .header of the Opposition, Mr iH. E. •Holland, in his policy speech in Wellington on November -4, stated that in the present crisis the credit system in private hands had practically broken down, and there was a marked lack of co-ordination between finance and industry. This is a sweeping statement without a particle of truth in it. The credit system in private hands has been used lavishly in trade and industry. The chief dealers in credit are the (banks, and the banking returns for September quarter disclose that the banks have advanced to the public more than they have borrowed front the public, that is to say that the advances and discount combined, exceed the fixe-]' and free deposits. The banks have over £sl millions in overdrafts, and the money has been advanced to traders, manufacturers and producers. Almost every company balance-sheet shows on the debit side, an overdraft item. Private individuals have advanced huge sums on mortgage and many of them have taken second and third mortgages, and most °f this money has gone west, because the property on whjch the money was lent was over valued.

In addition to this there is the Afortgagees 1 Relief Act to further cr pple mortgagees. It is well known that farmers are finding it difficult to raise money, but that is due to the previous moratorium. Mortgagees were on that occasion badly circumstanced, and there are few willing to go through a similar experience. Alortgage money is difficult to find now. The money that would otherwise have been lent on mortgage is now being invested in shares, or >has been placed on fixed deposit with banks and building societies, although the latter are’ doing very little in this respect. The main trouble of the Government as well as private individuals is that revenue and income are very much less than they f were two years ago, while interest and other obligations are unchanged. This is what is forcing the Government and the people to exercise the' greatest economy. The shrinkage in revenue and income is due to the fall ■in prices' o'f our export products. That is the fundamental cause of the depression in New Zealand. The Socialist Party have a scheme for getting clear of the depression.

According to Air Holland, the Labour Party would raise' ! sufficient credit for immediate industrial purposes, employing methods somewhat similar to those adopted during the war. One of Gk; methods adopted then was to raise a forced Joan, and the banks helped the country. Alany businesses took up their quota of the loan at par, and very soon afterwards selling out at a very heavy discount. During the war £55 millions was raised in the Dominion, but then money was pouring in for our produce. The British Government took all our wool and meat under the commandeer. It is a very different thing now ; 'or we cannon get anything like coinmisa deer prices. The Labour Party would use the nation’s credit for purposes ••!' economic reconstruction and rehaoilita tion. A sum of £25 millions .says Vir Holland) spread over three years 'v-n’.l be sufficient to put the Dominion once again on its feet. Because of :ie heavy debts, both public and private we arb feeling the depression, and the Labour Party proposes to increase the public debt by £l6 per head of population, and by going deeper into debt we are to see the advance of prosperity. It is absolutely the most novel method of overcoming depression. Who believes in it?