The Waikato Times WEDNESDAY, MAY 11, 1938 THE NATIONAL DEBT

Waikato Times, Volume 122, Issue 20495, 11 May 1938, Page 6

The Waikato Times WEDNESDAY, MAY 11, 1938 THE NATIONAL DEBT

In the course of his speech on Monday night the leader of the pposi ion challenged the Prime Minister to produce the figures supporting the assertion that the National Debt had been reduced last The information -.vill be available to Mr Savage, and probably he realises that his statement has caused widespread interest. It would not, of course, be the first time that the debt had been reuce . The Liberal Administration effected a slight reduction early “ lts tenure of office, cutting down the debt by £117,000 in 1891-92. There was also a small reduction in 1922-23, and a very large one four years ago, but that was due to the redemption of the Treasury bills issued in connection with the Banks Indemnity (Exchange) Act. The fact stands that the debt at the end of 1935 was over £2,000,000 below that at the end of 1933. It remains to be seen whether the Prime Minister was referring to the total State indebtedness or simply to the debts due overseas. He made no qualification, but if he meant the overseas obligations then a reduction would not be in any way unusual. The amount owing in Australia has been reduced steadily of late years. In 1928 it stood at £4,168,000, but at the close of 1937 this particular debt was only £891,000. The tendency of late years has been for a larger proportion of the National Debt to be held in the Dominion. In 1928 the percentage so held was 42.75 of the total, but in 1937, the last year for which official figures are available, the percentage was 45.21. The proportion held in Great Britain has touched as high as 57.11 in recent years, but has since fallen to 54.48. A transference does not necessarily mean a reduction. Each 3'ear, of course, substantial payments are made into the Debt Repayment Account, and last year they were probably in excess of £1,700,000. In 1936-37 debt repayments overseas amounted to £2,675,000, but the debt domiciled here increased by £7,785,000. The net increase for the year w r as £5,109,000. The Prime Minister’s statement was taken by all his hearers to mean that repayments had exceeded new borrowing, and the figures should be made available. Such a thing, as has been shown, would not be without precedent, but the particulars would be* interesting. It is a good thing that matters in connection with the overseas indebtedness of the Dominion have been raised. There are loans maturing in London in 1939-40 aggregating £17,173,000. They will involve redemption or conversion issues on the largest scale since 1929, when Sir Joseph Ward, by very prompt action, concluded the conversion of loans totalling over £25,000,000 just before the depression swept round the world. That was a courageous transaction for which the Liberal leader never received the credit to which he was undoubtedly entitled. Had the country been faced with the cost of securing temporary accommodation, for new loans were not possible, then it would have had to pay, as did the Commonwealth, up to 6 per cent, for short-dated loans. With such a large amount maturing in London shortly no time should be lost in making arrangements. Perhaps the fact that the loans will be conversion issues, and not new money, will do something to ensure a response much better than that accorded the recent Australian issue, which was poorly supported and met a falling market. If conditions are favourable it may be possible to convert the expiring loans on terms that will enable the Dominion to save a substantial sum annually by way of interest. It is clear that every effort must be made to maintain the credit of the country in the money market, and the less that is heard about kicking over the financial traces and a resort to unorthodox methods the better it will be for the authorities. That large maturing issue must be always prominent in the mind of the Minister of Finance. Its successful conversion will be a problem, and there is no need for anyone to add to the difficulties by wild statements about the manner in which the Government intends to finance its social legislation.