Sunday, June 25, 2006

Paradise lost........

People are sometimes tempted to believe New Zealand in the fifties and sixties was some sort of paradise, especially after a week like the last. But every period had its problems.

The following excerpts are from the Investors Chronicle written by a London correspondent in November 1959. He appraises New Zealand as a place to invest:

"It would be idle to pretend that everything is perfect in New Zealand. There are some big snags unadvertised, but definitely there is in every new country. New Zealand is no exception. Tucked away at one end of the world, it undoubtedly has a small-town outlook and its Governments of whatever party tend to grind out dreary 19th centuryish radicalism. It is under-populated with 2,500,000 inhabitants. Its potential has not yet been really tapped and the country remains primarily agricultural and pastoral".

Referring to the upward trend in brewery shares since the war, the correspondent says this has occurred in the face of considerable adversity, much of it artificial. The two big breweries still have to contend with a poll every three years for or against Prohibition, hamfisted hotel price control, and last year the doubling in one go of duty on beer. In spite of all this the rise in their shares has been almost sensational.

"Even these performances could have been bettered were it not for a drab egalitarianism which abhors the idea of luxury hotels and so prevents New Zealand with its magnificent scenery from being properly opened as a tourist resort," the correspondent continues.

"The balance of payments is a perennial worry to New Zealand. Last year things became really critical and the Government faced with the necessity of doing something desperate however unpopular, jumped up taxation in a big way, slashed import quotas and borrowed a lot of money abroad. However this year the terms of trade turned more favourable and the Government measures have been shown to be more panicky than wise. The extra taxation has proved crippling and has produced more income than was really necessary. Strict import quotas only lead to dishonesty and foreign credits were found to be larger than required."

"With an election in the offing next November, the Government could not admit to having been wrong and little was done to put matters right in the last Budget, so New Zealand has now supplanted the United Kingdom in the unenviable position of being the most heavily taxed country in the Commonwealth."

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