THE NASH-NORMAN COMPROMISE
At long last Mr. Nash's mission has been completed, and, after a lot of hard bargaining, a compromise has evolved. Altogether, the New Zealand Finance Minister has not done badly, although he has had to be content with considerably less than he was originally asking. There is a £5,000,000 credit for defence, another L4,000,00o for ordinary imports, and now we have the £16,000,000 31 per cent. conversion loan to cover the January maturity. Nominally, of course, the rate of interest is low and doubtless that makes things a little more palatable to the New Zealand people, but there are some very stringent sinking fund provisions. The New Zealand Government has undertaken to provide for the re- demption of the stock sufficient sterling to repay £2,000,000 in 1940 and £3,500,000 in each of the four succeeding years. Thus, the whole loan will be paid off by January 1st, 1945, the average life of the stock, allowing for the half- yearly application of the sinking fund, being just over three years.
These are stiff terms, but not more so than the position called for. A longer-dated issue would have necessitated a much higher rate of interest, and in any event the Dominion has a formidable list of maturities between i944 and 1949. Without counting optionally redeemable stocks there are six issues, repayable at fixed dates in this period, to an aggregate amount of over £56,000,000. It is obvious that if New Zealand is to tackle this problem without considerable strain every effort will have to be used to strengthen her external finances. During Mr. Nash's mission to London there has been no attempt to dragoon New Zealand into accept- ing any social policy dictated from Whitehall or Thread- needle Street but it has been made clear that the City must take account of the external results of whatever internal policy Mr. Savage's Government pursues. Thanks to the co-operation of the London banking system, which has been mobilised for this purpose by the Bank of England, New Zealand's most pressing financial problems have been solved. It is now up to the Dominion to do what is neces- sary to fortify its capacity to honour its bond. In the latest Budget proposals there are signs that Mr. Savage's Govern- ment is prepared to ask New Zealand to tighten its belt.
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