Wairarapa Times-Age WEDNESDAY, MAY 8, 1940. FINANCING THE WAR.

Wairarapa Times-Age, 8 May 1940, Page 4

Wairarapa Times-Age WEDNESDAY, MAY 8, 1940. FINANCING THE WAR.

AS they were outlined briefly by the Prime Minister (Mr leaser) at Auckland on Monday, the immediate financial ae m . „T o L makes on New Zealand obe.oas ywd earn slitute no light or easy harden. For the eorrent , <•• .«a expenditure is estimated to ’ 0 ,1 Minister stated, is to be found by various mea.ns, which ma> include some additional taxation and the tapering-01l oi ee - tain public works and other expenditure.

On these facts, and bearing’ in mind that the duration of the war is uncertain and that it may last for years the desiraIXv ol' meeting war ousts to the greatest extent hat ts po - sihle by current savings and economics is suitioientlj omp 1.1. 1sed Taxation in this country is already at such a hi o h lc that anv further increase must tend in a serious degree to cheek and limit production. On the other hand, since ta . tion and national expenditure have both increased very lapid]y in the last few years, it should be possible to effect very considerable economies without causing', in that way, any undue hardship.

We can ease our war burdens only by increasing prodnetion and bv cutting down non-essential, expenditure. Hie possibilities the situation, holds are summed up tersely in an economic bulletin issued by the Canterbury Chamber of. Commerce: —

Whatever methods of financing war expenditure be adopted, the general result is the same. From the income of the people, earned by the production and sale of marketable goods and se - vices, the Government must extract sufficient to meet its requments. Unless substantial economies can be achieved 01 1 duction considerably increased, the expenditure of a aige part of of the national income on war must necessarily result in leaving less for the community, and hence in lowering its general standard of living.

Tn a practical approach to the problems of war economy, the same demand is made, at a broad view, on public authorities and on private individuals. The right thing to do is to concentrate on what is most essential and to be ready to dispense, for the time at least, with what may best be done without.

In a country like this, purposeful efforts evidently should he made to expand some leading branches of production. On that account and others it is most essential that a substantial part of our war expenditure should be met by reductions m other sections of current, national expenditure. .With large numbers of men being withdrawn for military service, it sureh should be possible to transfer to sell-supporting, productive industry men now kept in public works or other employment by means of subsidies. Some further additions to taxation no doubt are inevitable, but taxation that tends to prevent the fully productive employment of our total available labour force will be an extremely ineffective contribution to the national war effort.

Highly important questions arise in regard to that part of onr°war expenditure which must be made overseas. It should not be concluded as a matter of course that this expenditure can. only be met by borrowing and by allowing the debt to accumidate for the period of the war. Provided adequate shipping transport continues to be made available, it may be possible to increase our staple exports and to build up our export surplus. The last may the more reasonably be anticipated since, apart from the import restrictions already in force, war conditions are bound in themselves to impose some limits on import trade. Should it prove feasible to build up an increased export surplus and increased sterling balances in London, the question may well arise of paying as we go some of our external as well as our internal war costs. SWEDEN AND THE NAZIS. QNF of yesterday’s cablegrams reported an announcement by the German News Agency that “Herr Hitler and King Gustav exchanged letters late in April confirming an agreement on future policy in conformity with recent, Swedish and German declarations.” At its face value, the announcement implies, on the part of the King of Sweden and his Government, what can only be regarded as an extraordinary degree of gullibility. The essence of such an understanding as the exchange, of letters is supposed to have established- —the only thing, indeed, that can give an understanding of the kind stability and value —is mutual faith. All the world knows, however, that the Nazis are inea]>ablc of good faith. As the Norwegian Foreign Minister, Professor Koht, has said: — It is perhaps Germany’s worst defeat in recent years—this moral defeat that no one in the world dares any longer to trust a word that the present German Government utters. It has rendered the term, “the honour of a German,” a term of derision . . . Since the reported exchange of letters took place late in April, the implication is that Sweden sought friendly understanding with Germany at least a week or two after that country had made its criminal and treacherous attack' on Norway. Apart from the question of international morality that is involved, Sweden’s action implies an almost incredible degree of fatuity. Nothing is more certain than that if the Nazis decide that if will sail their purpose Io attack ami invade Sweden they will do so without being deterred in the slightest degree by the exchange of letters now reported or by any moral consideration. Il is possible that the Soviet would object Io a German invasion of Sweden and that this might weigh with the Nazis. These doubtful possibilities apart, Sweden is secure against Nazi aggression only in Ihe extent to which she is in a position to oppose force with force.