The Manawatu Herald. Thursday, May 16, 1912. LENDERS AND BORROWERS

Manawatu Herald, Volume XXXIV, Issue 1044, 16 May 1912, Page 2

The Manawatu Herald. Thursday, May 16, 1912. LENDERS AND BORROWERS

IT has been observed at various timers aud by various emiueuts that a small group ut international hnan lets could eitner make war or stop it. The rise and fall of nations, their progress and success are indissolubly connected with the system of international credits. The great powers are either lending nations or borrowing nations. Britain is the greatest of all lending nations aud the strength of France depends very largely on her ability to raise from the general populace huge sums of money in the shortest possible time. The quarrel of one borrowing nation (like Germany) with a lending nation (like France) involes immense monetary interests in Britain aud elsewhere. As soon as a borrowing nation contemplates war or is disturbed by events that may lead to war, the intricate system of credit becomes dislocated. Germany for instance, which does most of its business on paper, experienced the most disastrous financial panic during the Morocco scare. Countries that are pawned are handicapped from the moment international complications ensue. Money fights. Germany is in the position that its hugely increasing navy is mortgaged to pawn brokers (France aud Britain) which supply most oi. the cash for Germany’s ironmongery. The position, should war unhappily result between Germany and Britain or France, is that Germany would be able to carry on solely by the aid of the money borrowed from the enemy ! If an absurder situation could transpire, it would be useful to hear about it. Itr is the fashion (aud the fashion Is noted in New Zealand) to suppose that John Bull is a doddering old imbecile, who is being pushed from his pedestal by the superior talent aud acumen of the German. While the German is pushing him off his pedestal he is paying him interest. While the nations of the earth are barking at one another John Bull quietly shuts up and builds millions of pounds worth of ships foi them to play with. While every nation is piling up national debts that are absolutely appalling, John Bull is paying his off. Germany in six years has added to her indebtedness, while John Bull has decreased his by —proof positive of course of the leeble intellect of John Bull! A couple of years ago a few eminent British hotheads demanded that Britain should borrow to buy a lot more ships. Stolid John Bull steadfastly refused to mortgage the British navy to Uncle Issacsteiu or Sir Benthamen Motheth, aud so we get down to the point. The stay-at-home stolid (“stupid” if you like) Briton refuses to become Germanised or Gallicised or colonised. It is weak of him not to copy us, but he doesn’t. He is very slow. He conceives it best to pay back aud the money he borrowed (from his own people) than to borrow ,£112.000,000 as Australasia has done in six years. As John Bull has supplied the larger proportion of this terrific sum aud is getting interest on it aud will continue to get interest on it irom our great grandchildren, he is in a particularly comfortable position about it. Australasia, not particularly that portion oi it which we honour, has devised methods by which our successors will be enabled to pay back these ever increasing millions. Our particular method under the Debt Extinction Act may be explained by a simple illustration. A man borrows a sum or money. He places a trifling portion of this sum to a “sinking iund' j which he contemplates will gather interest enough to wipe the whole debt off in a i.umber of years. He pays interest on the principal all the time. He finds in the passage of years that the sinking fund has grown to a spendable extent —so he spends that too. It is precisely the method contemplated by the New Zealand national financiers. The existing debt is to be wiped off by this means in 75 years. In the meantime New Zealand and Australasia generally will continue to borrow, will continue to gamble with sinking funds and will continue to pile up debts for the unborn colonials to pay. The funniest thing is that these colonial gamblers Iteely tala about becoming luucpcudent. It is the independence of the man who has pawned his property and is cutting up the loan as fast as he can. When there is international clamour the non - borrowing nations will hold the key of the situation, in the day of foreclosure Germany will wear a pale look, aud as tor Australasia she will direct the mortgagee to the sinking funds that have been systematically spent and which do not really exist as negotiable assets.