The Daily News. WEDNESDAY, AUGUST 11, 1920. THE FINANCIAL DRIFT.

Taranaki Daily News, 11 August 1920, Page 4

The Daily News. WEDNESDAY, AUGUST 11, 1920. THE FINANCIAL DRIFT.

The more the financial position of the Dominion is examined the greater "becomes the feeling of anxiety over the effect of the large annual increases in expenditure. It is little short of a calamity that Parliament is at present lacking among its members a financial expert who would inspire the public with confidence. The expenditure for the current year is estimated at nearly twentyseven millions, showing a rise of over eight millions in two years, as compared with an increased revenue of over five millions. Manifestly if this disproportion grows it will become necessary either to raise a loan or to impose more taxation in order to make both ends meet. Practically the present soaring of expenditure is akin to gambling on tie Dominion's past and present prosperity, without making any allowance for a decline in prices of produce, though the indications are that wool, meat and hides are all likely to suffer in value. Transactions connected with loans have also to be taken into account, and these must inevitably increase the annual charges. Loans to the amount of over ten millions will mature during the first nine months of the financial year, and must be renewed. Fortunately nearly all this money emanated in the Dominion, but it may safely be assumed the lenders will not renew at anything like

the same rate of interest, nor ia it to be expected they should do so, and it may possibly be necessary to pay off that portion of the money held outside New Zealand, involving an additional one or one and a-half per cent, for interest, for money is now regarded as being worth six per cent. Apparently it will be necessary to raise loans during the year totalling eighteen or twenty millions, independent of loans for public bodies—another million or two probably. Inevitably this borrowing, coupled with the huge advance in departmental expenditure, must not only increase the cost of living, but will also atill further depreciate the value of the sovereign,; with the certainty of further rises in wages, and more industrial troubles. Under these circumstances there, ar6 good grounds for anxiety, as to the future. The present accumulation of capital in the Dominion, large as it appears, is not inexhaustible like the widow's cruse, and its depletion will menace the country's financial stability. The position needs facing, and the brake applied to the spending power of the State.