THE OTAGO DAILY TIMES FRIDAY, October 4, 1940. WAR FINANCE

Otago Daily Times, Issue 24420, 4 October 1940, Page 6

THE OTAGO DAILY TIMES FRIDAY, October 4, 1940. WAR FINANCE

The Prime Minister, in his contribution to the debate in the House of Representatives on the Government’s policy in- respect of war finance, sought to make it clear — needlessly, as it would appear to most of his hearers —that the Government stood for the conscription of wealth as well as of human beings. There was little or nothing in the speeches of Opposition members to indicate other than complete acceptance of that principle on the part of those taking the long view of war’s necessities. Mr Coates probably expressed the feeling of the rank and file of people throughout the country when he said that nothing must be allowed to stand in the way of victory in the struggle in which New Zealand, as an Empire unit, is now engaged, even if, to that end, our resources in both men and money are drawn upon to the point of exhaustion. It is, nevertheless, reasonable to suppose that room exists for differences of opinion on the wisdom or unwisdom of the Government’s approach to the complex problem of war finance with which it has to deal. The attention of members during the debate was naturally focused in the main on the Government’s recently published proposals for the raising of a compulsory loan, which were ably defended at the outset of the debate by the Minister of Finance. It was definitely not the intention of the Government to “buy patriotism,” said the Minister, in outlining 'the procedure to be followed in raising an initial war purposes loan of £8,000,000. The apt retort of the Opposition spokesmen was that, by introducing a measure of compulsion before the willingness of investors to subscribe on a voluntary basis had been properly tested, the Government might merely succeed in buying difficulties for itself, and creating difficulties for tax-paying businesses, at a later and more critical stage of the war. Mr Bodkin put the issue in its clearest terms when he protested against suggestions from the Government benches that the Opposition was opposed to the principle of conscripting wealth for war purposes. Where they were at variance, he said, was on the method contemplated by the Government for securing the money required by it at this stage. There is undoubted force in the argument that the Government might have been wiser, at the beginning, to endeavour to recruit free money for war purposes rather than money which is already working in industry and which it may gravely embarrass many businesses to have to provide. A loan launched according to normal market procedure, bearing from the commencement of its tenp a low rate of interest, would almost certainly have succeeded in providing the Government’s immediate requirements, it was submitted, whereas under the procedure that has been decided upon many investors will, under compulsion, have to pay for the privilege of lending to the Government free of interest for a period of three years. It was submitted by Mr Coates that such a position—which he said could be expected to result in the early forced sale of holdings at a substantial discount by investors compelled to realise and cut their losses—might have been avoided, for the present at any rate, if the Government had been content to defer compulsion until the need for it became evident. There is no- , thing in criticism of this sort to support the view that there is objection to compulsion as a principle. But there is sufficient in it to suggest that the Government might do much better than take its financial fences before it reaches them. The country will pay, to'the fullest extent of its means, for the prosecution of a war that must be won, but the encouragement to pay would be so much greater if there was clearer evidence of the Government's desire to make the way easier for those upon whose resources it has been forced to make call. We are ourselves gently rebuked by a corre spondent this morning who has read the complaint of “ hardship ” into our recent comments on the loan proposals, when we have in fact done no more than point to the anomalous nature of the requirement, insisted upon by the Government, that the burden of contribution to the loan shall fall entirely on a limited number of people—apart from companies—who are already among the most severely taxed in the community. We have freely admitted the need for the recruitment of money as well as men for war purposes while pointing out that, according to the Government’s original intention, the burden of war finance was to be more evenly spread than is contemplated by the present proposals.