CHEAP MONEY.

Taranaki Daily News, Volume LV, Issue 272, 9 April 1913, Page 4

CHEAP MONEY.

Mr. Masscy, in discussing national finance in Now Plymouth on Friday, referred to tiic need for maintaining the credit of the country and obtaining money cheaply. for developing our resources. He look occasion to contrast the cost of the loan recently raised in London by Mr. Allen with that raised by Mr. 'Myers during last year. As Mr. Massey said at the same meeting, "there are two sides to every question,'' and the other side to this financial transaction is that whilst Mr. Allen's loan was for over thirty years, Mr. Myers' was fdr lint two years. There was therefore a slight difference between the two. Short-dated loans, as Mr. Massey truly said, are inadvisable and embarrassing, but in the case of Mr. Myers' loan it has, in justice to him and to the (iovernment he represented, to be said that 113 took what the linancial advisers of Xcw Zealand in London thought the best course open. The linancial market was in a chaotic slate at the time, and they were not prepared to commit the country to the payment of the high rate of interest for n longer period than two years, at the end of which, it was predicted. conditions would be easier. That this prediction was not unjustified is shown by the I'iict that South Africa last week had a large four per cent, loan underwritten at par. which, of course, is better than the terms secured by Mr. Allen. Willi the termination of the Halka us war in sight, monetary conditions must further improve, and it is quite possible that when Mr. Myers' loan falls due it will be converted into stock that will cost Ihe country actually less llian Mr. Allen's loan. • At the same time, "we do not believe anyone in Mr. Alien's place could have done better than he did. lie secured the best terms possible. at (he time, just as Mr. Myers did the previous year. Tf we are to believe Mr. Okey, however, (lie country is making a big mi-take over securing

cheap money. Speaking at the Strat-. ford banquet last week lie sakl: "The I cheap money scheme of the previous Ad- ■ ministration has driven private capital I out of the country, and the local bodies, I which hust have funds for public works, j are compelled to borrow at sor 5'/ 2 peri cent, as a result." Whilst, therefore, j his political chiefs are complaining of the scarcity of cheap money and the necessity for securing greater supplies in older to carry out pressing public works, we have Mr. Okey declaring that the introduction of the cheap money scheme was a big mistake. But surely the estimable member for Taranaki was not speaking by the book. He must for the nonce have forgotten the conditions that prevailed before the Liberal Government passed the beneficient legislation under which settlers and local bodies obtained cheap money. For ordinary loans, many a farmer in Taranaki had to pay from 8 to 10 per cent., whilst it was almost ail impossibility for local bodies to secure money in adequate quantities at a reasonable rate of interest. Cheap money quickened the development of the country in a way that nothing else could have done, and ■ has largely contributed to make New j Zealand what it is, the most progressive and prosperous part of the British Empire. It may be that the concerns that levied high, almost usurious, rates liavo been driven out of the country by the operations of the State lending departments, but few will sigh over their departure and few will desire their return. On the other hand, the great majority will agree with Mr. Massev and Mr. Fraser that a continuance of the flow of cheap money is essential to the successful development of this country- Incidentally, it is well to remember that the man who was chiefly responsible for the inauguration of the cheap money scheme and the establishment of the State lending departments was Sir Joseph Ward, who in this rendered New Zealand a service the value of which must now be patent to his most uncompromising political opponent. It has also to be remembered that whilst Sir Joseph Ward occupied a seat on the Treasury benches, the lending departments were never without funds. Sir Joseph had his faults—and has paid and is paying for them —but in matter of national finance he never once failed. He had the ear and confidence of the great financial houses of London, and we will not bo surprised that when the inner history of the raising of Mr. Allen's recent loan becomes known it will be found that the late Premier had not a little to do with the comparative successful flotation of the present Government's first loan.