Wairarapa Times-Age FRIDAY, AUGUST 11, 1939. OUR DEBTS TO BRITAIN.

Wairarapa Times-Age, 11 August 1939, Page 4

Wairarapa Times-Age FRIDAY, AUGUST 11, 1939. OUR DEBTS TO BRITAIN.

A WILD and whirling utterance by Mr. J. A. Lee, in the House of Representatives on Wednesday evening, rather more than hinted at the possible ultimate repudiation ot that portion of our national debt which is domiciled m the United Kin 0 ’do in. Nothing,' else t lmn u provisional, tin eat o. xepuc in tionseems to be implied in. the observations with which Mr. nee is reported to have concluded his speech in the l<nianeial Debate: —

Unless New Zealand obtained a low rate of interest in Great Britain and got all her loans refunded on a long ; ter .^ o a^?iL Sa U^ l plan, no Government in New Zealand could meet the obiigation. “If our nation is put in paper chains, the chains of bonded debt I want io suggest to Montagu Norman that some day a pohtical Vulcan will arise who will set fire to those papei chains an liberate New Zealand, and New Zealand will support that political Vulcan.”

Since the declared policy of the Labour Government of which Mr Lee is a supporter, is to honour in full our debt obligations in Britain and elsewhere, the declamation of. the member tor Grey Lvnn on the subject of these obligations is largely robbed of importance. It is as well, however, that the true position should be made clear in Parliament and throughout the Dominion, if onlv in order to eliminate the danger of awakening unwarranted fears in the minds of investors and others in the United Kingdom—fears which might work out in somewhat unpleasant fashion for New Zealand.

The question of debt repudiation and its consequences does not, arise in New Zealand and in spite of Mr. Lee s outpourings certainly would not. open the way to any such conditions of need not be expected to arise. If it did arise, however, it ease and comfort as Mr. Lee apparently thinks it would bung within reach. In face of deliberate repudiation by any Dominion, Britain no doubt would adopt much the same policy as she put into force when the Irish Free State annexed land annuities that were payable to the British Treasury. In that case Britain imposed special duties on Irish produce, thereby nettiim approximately the amount of the withheld annuities and incidentally playing havoc with Irish export trade. Even if the position” were not governed, as it is, by a regard for simple good faith, a practical appreciation of the consequences that would be entailed should suffice to discredit very completely any thought of the repudiation of our overseas debt obligations.

Save in the extent to which it embodied sinister suggestions of possible repudiation. Mr. Lee’s survey of the debt position was not without interest and practical value. Financial conditions in which this country is borrowing to pay.interest on debts, while the debts remain unpaid, and in spite of some redemptions in detail are on the whole iricreasing substantially, cannot be regarded as satisfactory. The ideal remedy, which ought to be approached as closely as possible 1 , is a cessation ol borrowing and the progressive repayment and reduction 01. debt. In the first place, attention no doubt should be concentrated on the speediest possible reduction, in this way. of our overseas debt. The figures of our debts falling due in London during the next five years, and indeed over a longer period, are somewhat appalling," but the task of dealing with this mass of debt under an amortisation plan is within the capacity of the people of New Zealand. The shaping of an effective amortisation plan at the same time represents the best means of securing as favourable terms as can be obtained mi the London market.

For means of lightening our burdens of external and internal debt, we are and will be dependent mainly on the industrial and general economic development of the Dominion. An effective policy of oversea debt redemption implies and must long continue to imply definite restrictions on the volume of our imports from abroad. The facts in this respect are brought out very clearly in the conditions of the New Zealand conversion loan just floated in London. The heavy annual capital redemptions provided for can only he carried out by exporting uoods to a corresponding value, over and aliove the balance of exports over imports needed for other purposes.

This, at an immediate view, entails a reduction in the available volume of consumers’ goods, as well, perhaps, as ol some other classes of goods, and therefore a reduction in living standards in the Dominion. It remains for ns as a people to make good this shortage, and if possible more than make it good, by expanding productive enterprise within our own borders.'-There is every hope of our meeting tin* demands thus raised if we make wise use of our resources and build up conditions in which the Dominion will carry a progressively increasing populat ion.

The solution of the problems which confront us is lo be found, not in vague and iinsett ling talk about repudiation of debt, or in rhetorical denunciations of ‘‘financial gangsters,” bid in productive work, and in an enterprising development of industries, based lo the greatest extent that is possible upon the internal resources of the Dominion. This implies, amongst other things, a drastic curtailment of the unproductive work to which our present Government is much addicted and perhaps of some other features of its programme. Certainly ii is by working at and on our problems, and not by shouting or yelling about that we shall make headway.