PREMIER’S APPEAL

Hokitika Guardian, 1 March 1933, Page 5

PREMIER’S APPEAL

• TO BONDHOLDERS REDUCTION OF INTEREST. V (Per favour of iGovernment). ! , WELLINGTON, M*rdh. 1. Honourable members hav e heard the statement that has been made by my colleague, tli e Munster of Finance upon the introduction of the New Zealand l>ebt Conversion Bills, afid I desire to supplement the very full information contained in that statement by an appeal to my fellow citizens, who are holders of Government stock to avail themselves of the provisions of the Bill and thus to assist iD easing the loa 1 which the country is carrying a.t the t present critical period, by reducing materially the. burden of interest payments on our internal'debt. There can be no doubt that if the object of this conversion scheme is attained, not only will th e interest load on the community be lightened, but the national credit of the Dominion will be .greatly enhanced. * DECLINE IN EXPORTS. The : sharp decline in the value, of our exports due to falling market prices within the alhort period of three years has, as lion, members are aware, largely contributed 'to the acuteness of the Dominion’s pfeeent financial position. Th e value, of New Zealand’s exports in 1928 was £56,200,000, In 1932 it .wa. s £33,600,000 cv a decrease of 40 per cent. It has been estimated that the customs revenue for next financial year will show a falling off compared with t ! h e probable receipt® for this year of £1,400,000. The national budgetary deficit for the financial year ending 31st March, 1931, was approximately £1,640,000 and the following year £2,140,000. Th e anticipated deficit at! 31st March next is £700,000, while for next financial year we shall have to budget for a deficit of more than £4,000,000. BUDGETARY POSITION.

I may say that in these times of financial stress our position of working on unbalanced budgets 'is not unusual and primary (producing countries in particular have felt severely the effects of 'the financial blizzard. The question of bringing about a reduction of interest 'rates has for some time been e ngag>ing the earnest consideration of, the Government. To maintain these payments at their present price levels has present e d a problem that is difficult or well nigh impossible. The policy which 'the Government have* decided upon is contained in the Bill now before Hie ! Hdus^mnd^TnTstTfTites ~ on e ~"ot the measures which, in our opinion, are necessary to assist in restoring the financial stability of the Dominion,

'Nearly all out 1 taxable sources have already been .severely strained, and the country is isti.ll leit with an unbalanced budget. I know fliers are some who ■will say that the country -should maintain the present rates of interest on Government securities, in the fulfilment of contractual obligations, but it must be remembered that in asking for the impossible, the Effect under existing conditions will inevitably be a dearie I '' nation of those [securities. There can surely be no one who will claim that to -safeguard jealously the gilt edged nature of Government securities is not a whs© and prudent policy for any Government to ifoster. BRITAIN’S EXAMPLE. The magnificent response of the people of the United Kingdom in connection with % conversion of the £2,000,000,000 war loan is still f r €«h in our iTamories. The Cbanccllo r of the Exchequer {Mr Neville Chamberlin) has stated that thus action will play a large part in the provision of favourable monetary conditions, and that in the restoration of active trade nothing is more useful than a .substantial reduction in the long term rate of'interest. To supplement the fall in short term money vateis, tlhe conversion scheme of the 5 per cent war loan and the great public enthusiasm with whmn it was received, said Mr Chamberlain, tad Bnltish--r.lt edged f on a3} cent, basis- and it ■should

not be long before the -advantages 'gained by the gilt edged borrower .will' spread over into other fields <?f investment. • '• AUSTRALIA’S. ACTION. Another striking example 1 js afforded by the wonderful manner in which t(he people of Australia Tespbnded. to the appeal for the - conversion of ' their internal public -indebtedness Ain 1931, amounting to £558,000,000 leased on ’ a 221--'per cent reduction. of the rates of ' Interest on all (existing securities, h result which demonstrated that- Australians bad faith in the future Aof their .country and werA prepared, . to ‘ r make personal sacrifices ■ iir assisting S retur-n to financial stability. INTEREST CHARGES. - , A gerieml. lpwer-ingjif; tike: of-, interest chargee in Now Zealand will ~~ undoubtedly help to increase . the. 'returns of industry, reloo<?-« frozen capital ' and make for a reduction of 'costs. . A. Industry will b® ©nailed more -ea*i ? ly-'. ; Y) to obtain gudh capital as it need® ;and to «ecur e that capital on better-TJrwfc.-.’' Ht will also prove of. material 'ia^igtanca;. to the commercial classes, n* well as to our primary producers. ‘ , . . Ther e is a great concensus of . ppi^ion that the continued existence of a large amount of Government stuck yielding a relatively high return,is an artificial obstacle t©.a, tall in the .interest rate to a lower level, at which they would othemvise;..natuTplly . 'Stand, white , the prevailing economic di&t-jir-banc© lasts, with -ate fur reaching re. petv'ue.dons | ow ever/v section, of the population. ■ ■ 1 \ It ig the bounden duty of -a Government to gee tlhat. the,.'sacrifices inyblved are -spread as evenly, and as equitably a-s possible over the whole; community. ;■ The plan now proposed by the Govern- .■-~r me-nt is another case u? shortening, sail, when the etonm has burst upon us, and when the safety otf-the ship i» endangered, the moat prudent navigation i® rendered absolutely necessary; APPEAL FOR .SUPPORT. '

The scheme which - tlhe New Zealand Government have submitted to, parliament cannot succeed without the wholehearted co-operation of all holders of Government securities, the bondholder will realise that it is a matter of give' and take. In other words without tip, is rehabilitation plan he may lose a great ~ deal more than he will sacrifice under it. Without such a p;«a, rJio security represented by Government bonds maybe weakened. If bondholders co-operate with the Government .they will protect their own securities and -help-the country as well. It is therefor e in thei'r own interest to do all they can to ensure complete success for .the conversion plan. I • am certain we , shall not appeal to them in vain. The successful conversion of our internal indebtedness will bring about easier credit conditions, the future stability of the market, greater confidence among investors in. Government gectuitiet* of all kinds ,and ilowe r interest'rates for. the .future. Above all, th e reputation atnd prestige of the Dominion will be greatly enhanced in the eyes of - the

outside wend. , , ■ Holders of Government .stock in the Dominion will I am confident respond to the Government's appeal with the same goodwill and -- patriotism which New Zealanders, hav^. always' shown when a great national effort is required. /V. V ''' v " ~ G. W. FORBES.