ANNUAL LOAN BURDEN

Sun (Auckland), Volume III, Issue 723, 24 July 1929, Page 6

ANNUAL LOAN BURDEN

HOW MUCH CAN N.Z. CARRY? MR. STEWART’S LETTER (THE SUN'S Parliamentary Reporter.} PARLIAMENT BLDGS.. Tuesday. Replying to the remarks of the Prime Minister, the Hon. W. Downie Stewart (Dunedin West) said that the figures quoted by Sir Joseph Ward for a six-monthly period would, if that rate were maintained, involve New Zealand in an annual loan expenditure running into between £15,000.000 and £16,000,000. He did not think the Dominion was warranted in incurring an annual loan expenditure, however well designed, of anything like that figure. In his opinion the high credit of New Zealand on the London money market in the past was because she had carefully restrained her loan expenditure and had tried to show a gradual reduction instead of an expansion. In regard to the suggestion that it had not been possible for the Prime Minister to carry on his election pledge in regard to finance -because of some action of Mr. Stewart's, the member said it had no more to do with him than it had to do with the Prime Minister. It was known to the whole of the Dominion that, at the end of the year, a £29,000,000 loan would be falling due, and it was obvious that it might be desirable to anticipate requirements and renew a portion of it as opportunity offered, so that the amount ultimately to be converted would not be unduly large. In April or May of 192 S £5,000,000 had been converted, and the question as to what further conversions should be made was left over and the Government watched the London market. Nothing further happened until the middle of the election when information was received from the Government's honaon advisers that there was likely to be a hardening of the money market. it was thought advisable to have a further £5.000,000 renewed, and for the Government to borrow in anticipation of next year’s requirements. TIED TONGUES In reply to an inquiry as to how long the Government could wait before making a decision, word was received that it would be safe if it were made before the end of January. Therefore, if the Prime Minister said his tongue was tied, so also was that of Mr. Stewart. During the short session it had been his desire not to prejudice but rather to protect the Minister of Finance, continued Mr. Stewart. He had advised the Prime Minister of the position as best he could, but Sir Joseph Ward had said that he did not want ! his attention drawn to it in January. Sir Joseph Ward had made his decision, and a right one, to renew another £12,000,000, and also to borrow what he thought was necessary for the coming year. Neither himself nor the Prime Minister could forsee the position, but had any publicity been given the matter, it would have been detrimental to the country. PUZZLING STATEMENT Mr. Stewart said he was still puzzled by the Prime Minister's suggestion that he could not go on the London money market for two years. “I have a letter from a man well up in financial affairs in London, and he describes the kind of impression created in London during December as the result of the Prime Minister’s mysterious references at the time to something that would hamper his fin ancial programme,” said Mr. Stewart. “Inter alia, the correspondent stated: ‘The references of Sir Joseph Ward to the difficult monetary problems awaiting solution which had pravented him from getting a flying start, excited as much curiosity in London as in the House of Representatives. We, of course, could see that it was a politician’s game, but every city editor of repute made some attempt to solve the mystery. Some of the guesses were laughingly fantastic. As soon as Sir Joseph Ward's difficulties were revealed to a gaping world, London said nice things about New Zealand; that she was always a welcome borrower. and promptly forgot all about the business., So far, London has taken no particular notice of the grandoise proposal:! which Sir Joseph presented to the electors. She will wait and see. As you know, Australia has been violently attacked in this centre, and her credit has suffered badly. Not only does Australia pay more for her money, but inevestors will not apply

for Commonwealth stock on theT""'’ ot the prospectus, but wait L’2* l drops to a discount. i n thp U 1 it market the discount is a gift to ,2? The underwriters, however hav®carry the baby. How long w]i, ” continue to do so? I on i v ‘ these matters in order to show id’ happens when public confidence i all shaken, and we must be very * ful not to weaken London's ful faith in the stability and sa2S of New Zealand people.’*’ The Prime Minister: Who that? Mr. Stewart, with a smile: a c spondent of mine. Continuing, Mr. Stewart said on the planks on which the United pi * prided itself was that it had borrnsC freely to bring State Advances up-to-date. No one doubted that"*: possible. The question was aC 5 how far it was wise to go and sonally, he held that New ZeihT should regulate its borrowing limits that were reasonable for a ]> minion of this size and population