£4,000,000 EXTRA

New Zealand Times, Volume XLII, Issue 9794, 18 October 1917, Page 6

£4,000,000 EXTRA

NEW LOAN BILL ON WAR PURPOSES LOAN BILL (No. 2). IMPORTANT STATEMENT BY SIR JOSEPH WARD. TOTAL LOANS SINCE 1014 £67,335,000. Moving tho second reading of tbc War Purposes Loan Bill (No. 2) in the House of Representatives yesterday, tho Minister for Finance (tho Right Hon. Sir Joseph Ward) said that the bill was to give effect to tho intimation already made to the House as to the necessity for obtaining authority to borrow four millions more for war purposes. Tho bill provided for that and for that only. Ho wished, in tho first place, to tell the House what tho position of the country was with regard to leans for war purposes. He was rather disposed to think ,tiiat tho House was not. aware of what had been done since 1914 in connection with loans; but it was just as well that they should know, so that they would realiso what the country had already done and what it might yet have to do in the wav of loans for carrying on tho war. The total amount borrowed since 1914 for war purposes, and war purposes only, was £41,68-1,284. Two millions c£ lean authority was given in 1914; 10 millions in 1915; 16 millions in 1916; £500,000 in connection with tho Discharged Soldiers’ Settlement Act, 1917 : £500,000 in connection with tho Land Laws Amendment Act of 1916. section 6; and 24 millions under the War Purposes Loan Act, 1917; a total of £41,684,284. And there were amounts totalling £3,080,880, which had been authorised on account of transactions for which entries had not passed through the Treasury. That whs altogether a.part from tho four millions for which authority was now asked. In addition to these loan authorities, since 1914 there had been other loans authorised to tho amount of £6,077,700 —for public works, railway improvements. Rangitikei swamp drainage. Soldiers’ Employment Act, etc. —and that amount added to what he had indicated already gave an amount borrowed and loan authorities o'nt still to borrow totalling £47,701,984. Other borrowings and authorities to borrow brought the total borrowed and authorised since 1914 up to £63,335,000. Tho Minister added that a. great deal of the money asked for this year had been expended, and it was absolutely necessary to have a further authority of four millions to carry on tho war expenditure up till tho end of July next. Ho had quoted the aibovo figures to enable the House to see what tho war meant in regard to the money needed to meet expenses. Tho whole of those loans were necessary. Some of them were indirectly but closely connected with tho war, and were utilised for helping tho soldiers in various directions. The figures wore running into very largo amounts now, and it must bo quite obvious to every member of tho House that unless it was necessary to ask for a further authority for four millions, they would not bo asked to give it. But it was necessary to enable proper provision to be made to carry on the w'ar till the end of July, 1918. As ho had previously intimated to the House in July next they would have an opportunity of reviow’ing tho position again. He recognised, and ho thought that the House recognised, the great responsibility that rested upon them in regard to providing such huge sums. The country had to do its part and would do its part, so far as the war was concerned; and he felt quite confident that tho country was prepared to meet loyally and willingly whatever obligations might bo necessary for the purpose of carrying on tho war. (Hear, hear.) MEMBERS’ OPINIONS. Tho Hon. D. Buddo (Kaiapoi) said if another loan wore put on tho market it would only tend to raise interest and hamper the progress of tho country in many ways. Ho would like Sir Joseph to say when tho loan would bo placed on tho market. Mr J. Payne (Grey Lynn) said tho country during the war was quickly becoming tho victim of financial vultures. Tho people in tho years to come would bo merely a species of in-terest-paying serfs. Ho could not move an amendment to the bill, but ho would record his protest on this point. Tho people who would got tho 41 per cent, wore the banking institutions. This emphasised tho necessity for tho establishment at tho first possible moment of a State Bank. QUEEN ANNE METHODS. Dr Newman said that ho was disposed to agree with Mr Payne with regard to a State Bank. He thought that the State Bank had been a groat success in Australia, and that it would bo a great help to New Zealand. He thought that tho Government should have bought all the produce of tho country at the beginning of the war, sold it at a profit, and paid to r tho war that way. (Hear, hear, and laughter.) Their financial methods were old-fashioned. They were the methods of the reign of Queen Anne. Ho hoped that tho Treasurer would not, as had boon suggested by the moniber for Waitemata, raise any ot the money required by means of premium bonds. Would the Finance Minister tell them how much of the extra money, if any, was to bo raised before March next? That was a most important matter. Ho hoped that the Government would appoint a Royal Commission to control the present huge expenditure, especially Defence expenditure. Sinking fund charges on tho loan should ho suspended till after tho war. ECONOMY WANTED. Mr H. G. Ell (Christchurch South) also supported the proposal for a State Bank. Ho would like a stricter supervision over expenditure. Mr E. P. Leo (Oamaru) also asked for more rigid supervision of war expenditure. Ho would hke a statement from tho Minister about tho operation of the compulsory clauses of tae loan. Mr A. Harris (Wartemata.) supported tho suggestion for raising loans on tho premium bonds principle. H this were done the money would bo forthcoming from tho small investor. SIR JOSEPH WARD REPLIES. Replying on the discussion, the Finance Minister stated that ho could not adopt, at such a time of crisis, when such huge sums wore required, [

the suggestions that had been made with regard to premium bonds and a State Bank. As Minister for Finance, ho could not afford to run the risk of introducing at this juncture any idea of a system being established in the country which might provoke very great opposition in quarters, such as the great financial institutions, in which close co-operation with the Government was necessary. In tho times that then- were going through, and when such largo sums had to bo provided, it would be not only unwise, but dangerous, for tho Government to adopt the suggestion of a State Bank. They could not afford to do it. 110 said that advisedly. The responsibilities of tho country in respect to tho war were phenomenal, and if they wero to indulge in such experiments they would introduce a very undesirable weakening process. It had been stated that the Minister for Defence and ho himself had made mistakes last year as to tho requirements for the war, but that was not so. Their estimates had been according to the information at their disposal. 'the country had to pay for the munitions used in connection with tho war, and did they suppose that the Minister for Defence could advise tho Treasury two months in advance of what would be required for such purposes ? no thought it very unfair that they should bo subjected to such criticism net founded on fact. Deferring to tho demands made upon tho Treasury, he said that some people seemed to think that they could pull millions off a- tree as they would pull gooseberries. (Laughter.) He would try to make clearer tho statement as to war and other loans, which he had made on moving the second reading of the bill. The total War Loan authorities up to September 30th wore £‘53,000,000, and tho total amount of other authorities for the same period was £10,355,000, malting a total of £03,335,000. And to that had to bo added tho four millions now asked for, making a grand total of £67,335,000. Tho unexhausted authorities amounted to £20,438,000; and £46,847,000 had been borrowed in some form or another up till September 30th, including £6,077,700 for various purposes, not directly, though in some instances closely, connected with tho war. So far as possible, out of the twenty millions of authority yet available it would be his duty to do what he could, without forcing the position in any way, to got the British Treasury to accept Now Zealand stock, say, for six, seven, or ten millions, for what they owed to the Imperial Government on account of tho war; and that would relieve them from going on tho market to that extent. NO NEED FOR COMPULSION. Replying to a question by Mr Witty, he stated that there had been, no necessity whatever to put into operation the compulsory clauses of the War Purposes Loan Act, 1017, with regard to the first portion of tho twenty-four million loan. Including tho State departments, one of which had put in £250,000, and two others had also put in very largo sums, they •had bad from the public at the present moment a. little over £12,700,000. As a matter of fact, they had got as muon as they wanted; and in addition ■the banks had underwritten the loan to the extent of five millions sterling; making a total of £17,500,000. Of that amount over £700,000 had com© along since tho date of closing the loan. Ho had given instructions to keep the loan open. Ho had not turned anybody back, and did not propose to do l so. They could keep on applying still, except brokers. They wera not needed. H® might add that they had a large guarantee for tho further portion of tho loan, hut he could not say more on that point, as it was confidential. His impression was that they would not require to raise mono than ton or twelve millions more; and as to tho time when that was to he done, it depended upon circumstances. But he did not think they would require to raise anything before tho middle of March; and, in all probability, not before the end of March. His .business, of course, was to have as long a gap between borrowing tile first and tho second portions of tho loan as it was possible to have. COMPULSORY POWERS. He could not say whether it would be necessary to put the compulsory clauses into force in regard to the second portion of the loan. But, upon tho next loan subscriptions coming in there would be a. review of those who had not done their duty to last year’s loan and to tho first and second loans of this year; and it was quite certain that the compulsory clauses would bo put into operation. That must be done in fairness to those who had subscribed often at great inconvenience fo themselves. It might interest tie House to know that £1,271,000 had como in under the 5 per cent, bonds through the Post Office; that the groat bulk of the loan was subscribed for in tho 4 j per cent. War Bonds; and that some £037,000 had been taken up in War Loan Certificates. He was not'taking the five millions underwritten by tho banks, because he had got plenty, and he was not going to pay interest on money that jvas not required. So far as he could see, he repeated, they would not require to borrow more than 10 or 12 millions more before the end of March next. RATES OF INTEREST. There were indications that money had tightened and that rates of interest increased with the flotation of each loan. However, rates of interest could be regulated by Parliament. Six per cent, was not an excessive rate. The matter had been engaging his attention during the past IS months, and while ho did not want to make any rash statements, he could say that the rates of interest would not be allowed to go np excessively. People who were lending money had to bo in sympathetic accord with the Government on this question. Tho banking institutions had co-operated with the Government in a very iiuo way in the raising of the loans. OTHER POINTS. He wished to give a firm statement that as long as he was Minister for Finance he wonlJ-not release the sinking fund by ono penny. (Hoar, hoar.) Tho country had to be prepared for groat changes in the future, and tho population would bo groatly increased after the war, so that tho stop proposed in regard to the sinking fund would not bo a wise one. After the war an enormous reduction would bo made in taxation, that was if tho pressure exerted on the Government in some directions was not persisted in. As to the proposal for raising loans on tlie premium bonds principle, the country touhl not afford at this s.tago to embark in such a gambling scheme. In reply xo a question, Sir Joseph