LOAN FOR RELIEF
MR COATES’ VIEWS
REASONS FOR HIS^OBJECTION.
(Per Press Association— I Copyright).
WELLINGTON August 16. In the course of his written reply to the Mayor of Auckland regarding t the proposal to raise a ten millions i loan m New Zealand for rehab-ilita--1 tion purposes, Mr Coates said: There - is a natural temptation to look for re--3 lief in a method that is superficially. appealing,- but which on exmination - niay prove to be more of a stimulant than a. cure. The rise in prices of our produce i n England would automatically solve many of our .troubles. Without such a rise, anything we can do internally would probably act only in the direction of spreading the bur- . den without relieving the economic situation, unless we can establish 1 trades or industries, which being 'efficient and self-supporting are not a tax on the community. Apart from improving the quality of primary products and perhaps from : different methods of marketing, we s can do nothing to improve prices of I our exports; The return to campara- ; tive prosperity will depend to a large ■ extent on the revival'of world prices, i and international trade. It is quite - conceivable' that moderate borrowing -.would help, if the money were applied. - to specially selected Undertakings, but the possible effects of any borrowing must always be carefully examined; A. suggestion has been made that the ten' millions could ..he obtained from £25,090,000 unearned income. Apart from the dubious social and ethical validity of the suggested compulsory “loan,” it must be remembered that; most -of this unearned income has been invested or used in some', way. If increased Government expenditure is coincident with a revival iof'" world trade, then spending would be of material help inHquickehiiig such revival,! but otherwise the loan 1 programme, in-. sofar as; it adds to spending- .power, would produce a burst Lof temporary , 1 relapse;. ; '-uNT v; A . ' Assuming that tjiei£lo,oool,ooo. mentioned could be cbjbfiined in'-the ordiu-/ ary way ! at three per cent., this would? j mean ah annhal extra debt service of £300,000, unless money were expended on works th'itfc- would/proVide'their? own; Toiih'charges. ; T<ipA,F;-- ’ .■: ~'i ’ ■; : Another aspect- fqf.the . - matter,- is that the'market price/of Government • stocks would fall 'heavily.. This effect would l?e iljfft-: " pulsion were’used.”. ‘ d - There wq-s now in ’sight, added-Mr Coates, what he considered .to be the greatest gain from themcent conver* Aioti oyorations— mar«„ kht rates of intercstrtAThls; benefit; which wbtild be spread over every; field of investment, would be Tost- if the price of the present four per cent, ..Government securities (approx £115,000,000) was drived down as the result of excessive new issues. ’' ' ' if Mr Coates does not think it necessary to make lan’y.'h special provision for loans to lccalfbpdies.A-:r The deputation also suggested’using £2,i>'oG,Uuo of the proposed loan for re- ■ lief of unemployment. Borrowing might-temporarily; alleviate -matters, bur if pay on rel.ef works were raised substantially, tiie numbers of registered unemployed would’'probably be'considerably increased, ■ because business firms, feeling that more adequate -wages were being provided in other directions, would tend to give up their present attempt to assist by rationing work and employing men'; part time. If unemployment pay .'were, brought too near to current rates of wages, men would'largely lose the incentive : to search for other work in their own trade 1 or profession.- Unemployment. : relief - works from their very nature could not be fully productive, so that borrowing for this purpose would, to a. great extent-, bo merely adding to the d:a-d weight of debt, leading if the policy were continued, tio a breakdown . of unemployment relief financing. The proposed subsidy to primary j producers would need more than ; - the £3,500,000 mentioned, and as it would be mainly applied to. spending for consumption, the Government Would be left with a dead weight of debt. 'Furthermore, primary producing industries are already receiving -approximately the amount suggested through the exchange adjustment. The . community cannot afford to give both the exchange benefit and a subsidy.
As regards the'amount proposed for public works, the Government has in hand a £3,500,000 programme which should provide useful productive work. It is not advisable to go further than this at present. The remaining item was £500,000 for .assistance to various gold-mining schemes. This was one of the directions. whore additional assistance ought not to be necessary. The British departure from the gold standard, and the raising of the New Zealand exchange rate have each successively raised the price of gold. The community must continue to grapple with problems, and adopt measures that Will not hamper recovery, particularly as at the moment there are indica : tions the worst is r>"st, and there Is good gnound for hopes that better times ore to he looked for in the not far distant future.
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Hokitika Guardian, 17 August 1933, Page 5
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790LOAN FOR RELIEF Hokitika Guardian, 17 August 1933, Page 5
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