LYTTELTON SEAT

Hokitika Guardian, 11 September 1933, Page 5

LYTTELTON SEAT

LABOUR CHARGES GOVERNMENT AND FINANCE, (Per Press Assoriatio n— Copyright.) CHRISTCHURCH, Sept-. 10. Speaking at Cashmere on- Saturday evening, (Mr H. E. Holland, Leader of the Opposition, said that, while the Ministers of the Crown were busy making the exceedingly inaccurate and the equally foolish charge that, if the Labour party came into office R would provide money for the public needs by printing unlimited quantities -of State notes, the largest -budgetary statement placed before the House by Mr Coates snowed that the Coalition -bad been living on paper issues which, i n the main took the form of Treasury bills—revenue and redemption bills. •Indeed, the method adopted by the Coalition to finance operations -resolved itself into a procession of i.-o.u’s. drawn and negotiated by a Cabinet of hopeless -Micawbers- to redeem other i.o.u’s. of £15,815,000 that were issued in the form of treasury bills in the financial ye-'ir of 1932. A sum of nearly four a half millions wa s to redeem bills issued three months earlier. In addition to the .'revenue bills, there were substantial transactions in redemption bills, At April 1, 1931, redemption bills were outstanding to the -amount of £3,550,'000, and, <npproxima-tely, over one million of this was redeemed by borrowing, and the remaining two and a- 'half millions .was converted back int-o New Zealand debentures. A further amount -of four mil Tons was next issued in London in -redemption of maturing New Zealand debentures. Originally, this four million issue was made at discount rates not exceeding Si per cent., but i-n December, 1931, the bills were renewed for six months I at -per cent., and they were thus I outstanding at the end of the financial j. year 1931-32. However, they were redeemed with money borrowed in May, 1933, and thus .became submerged in the sea of -national indebtedness. - What had been the floating debt, ’ said Mr ’Holland, was now indistinguishably part of the ever-increasing n

permanent debt. He said : “Treasury hills are now used as constituted State securities, -and pledged to the bank for the loan of baiik-orealfed money .'Against Wiese (securities, the ■ bank, m-ade book entries in favour of the Government, and against these entries the Government was entitled to draw cheques,' which went into-"tirculrartion, transferring credit from account to -account. No legal tender money entered into the transaction as between the baiik and the Government. Indeed, there was not; in all New Zealand suf ik-ient legal tender money to meet, m. one. lump sum the treasury bills issued in 1932,

To meet, its pressing liabilities, the Coalition kept the (printing presse* 9 busy turning out treasury bills 7o be pawned to the bank at a comparatively high rate of interest. Against that method, the Labour party contended that, through the machinery of a nationalised banking system, the State could establish its own credits, based on the nation’s goods and services, for, after all, the only effective security at the 'back of the treasury hill was the public credit, and the foundation ,of all credit war, the goods produced and the services established within the country.

Air Holland also dealt extensively with the question of the rate of exchange. No one yet knew, he said, what the forc : ng up of the exchange rate wuold cost New Zealand, but he was satisfied that an approximation made by himself at Sumner, and supported by Air F. Langstone, would not be found to be very .far out. The proposal had never been 'before Parliament in the form of a Bill. The matter had been decided by Cabinet, and had been put into effect by Order-in.Cou.ncil, a method that was. uncompromisingly denounced by Air Forbes when he was- on the opposition benches. The only -part of the business 'that Parliament had been allowed to discuss w,as that of the indemnifying of the banks against loss in connection with their purchase, of the London surpluses. Air Ransom had stated that the value of the high exchange policy to primary producers during the last seven months was £3,200,000 on a 15 per cent, basis, and £5,280,000 on a 25 per cent, basis. Air Ransom’s figures wore correct.

Then, since the .pegging go of the exchange rate had brought no additional money into v ew Zealand on the 25 per cent bvsis, the five and a quarter millions had been levied on the people of New Zealand ; but, in the main, it was not the working farmer who benefit tml unless be was mortgage-free. The principal beriefidary was the mortgagee. In any case, the farmers themselves had admitted that forcibly lifting the exchange rate could only amount to a tomooi'ary relief. When it was first proposed, not only the Labour party, but also the Prime 'Minister, the banks and practically a’l of the' economists of New Zealand and most of the news-p/y-ier.s were against pegging up the exchange rate. The sudden somersault of the Prime Aliaid'er wns accomplished under pressure from big land holders within the Coalition, but- so far, there had been no satisfactory explanation of the somersault made bv the banks to meet * '••.-» bud go taw difficult ins erea.ed by the .pegging up. The Government, while enormously weakening! the ...source from which the taxer, were drawn, had in-