THURSDAY, OCTOBER 14, 1903. "THE SO-CALLED PUBLIC DEBT."

Dominion, Volume 3, Issue 637, 14 October 1909, Page 6

THURSDAY, OCTOBER 14, 1903. "THE SO-CALLED PUBLIC DEBT."

Some' speculation hag taken placc as to the significance of that passage in the Governor's Speech in which it is stated that Sib Joseph.Ward has made arrangements by which,, with a necessary alteration.of .the. law, moneys required "lor local bodies and other public purposes" can be obtained. It is being urged : that this statement,, read in conjunction with the proposal that the Advances to Settlers Department shall be made "the mediilm for obtaining jn England moneys for the use/of'local public bodies, and also for raising the necessary sums for the purchase of land fof settlement," means that the'Govornmont contemplates the establishment of what may be called a Loan Department, 1 'or the introduction into tho national balance-sheet of a .new account in which .will appear all the transactions relative to the financing of the State's "trading concerns." This is certainly, a very _ large deduction from the Speech, but it is quite possible that the. Prime Minister has something of the 'sort in mind. Much-can be said in favour of such a clarification of the Government's account hooks as. will make quite clear how much loan money and , how ~much rovcriuo is spent in any given .Department. There are real' advantages, for example, in a readjustment of the Public Works Fund that will enable the public to see that it is loan money that is to be' spent: in . building , this bridge or that pillar-box,. or in .constructing this road,or that railway line. But it seems that tho,object o,f the Government in : roaking the. proposal,' according to some of the friends of the Ward Administration, is not the straighteningoufc of tho .public'finances'and the provision of an intelligible .and straightforward system of book-keeping. /The object assumed—and the Ministerialists should be expected to know fairly well what the Government's aims are—is to convey the idea to tho public that money borrowed ;for. "trading concerns" is not-really an addition to the public debt. •' /' • ; A Government member is quoted as havingjmade the following statement:— _llcre we have been piling up'a so-called national debt:and earning a bad name for tho ■ Dominloiu . when :by a mere change' of bookkeeping fully one-half the loans of tho last eighteen years could have been debited to a separate, account. Those loanß are investments,' and they ought not to lie shown in the public debt at all. . . - \

I The, Ministerialist newspaper in Christ-, church is quite urgent on the point. If'lf a separate- account bad been' kept of<;tho trading concerns loans,'' it says, "some fourteen or fifteen million sterling wjuld ; nover have appeared as part of the national debt''; and "the capital of tho . trading Departments of the State should no longer be shown as part of the funded debt." The public probably will not regard.the hugo dimensions of our national debt as a jocular subject, but it will bo more hopelessly gloomy than it ought to bo if it cannot, enjoy a hearty laugh at this: amusing .evidence' of the straits to which Ministers have been driven in their endeavour.to cover up : an un" pleasant situation by the simple process of calling a substantial portion of our debt by a new and moro pleasing name. That part of our public dobt which is reproductive is, no doubt, much moro pleasant to contemplate than that which is not directly interest-earning; but it is nevertheless a part of the public debt— the country, has to carry the liability. Wo have all heard of the gentleman who, pitying his poor horse, docided to ease the load by placing the packing case on his own head as he sat on the shafts. This is the process . which tho Government's friends hint that Sir Joseph Ward has in contemplation. It is unnecessary, of course, to point out the obvious fact that no mattor' how the Government reorganises its method of book-keeping it cannot lessen the seventy millions sterling of public indebtedness or the interest bill by one penny piece. The public debt can be lessened only in one 'way—by paying it off,: and neither the public nor the moneylender will feel that there is > the least difference oven: if > the Government calls the debt an asset. The "so-called public debt" is so called because it is the public' debt. If the Government really has tho intontion attributed to it, and for the object attributed to it, it' will merely supply another justification of the Nation's summing up of the methods of profiigato colonies in its review of Mr. A. J. Wilson's recent volume 'An Empire in Pawn: When timesaro good, n spirit of confidence drives States into new developments which they can easily finance by loans, for money .is cheap; when times are Cad, they are obliged to borrow inoro, partly to conceal their' depressed state, partly to pay interest. Thus they nro brought into an entanglement of unsound finance, extrication from which becomes more difficult. They aro driven to conceal their condition; partly by such jugglery of publio accounts as provailsin Russia, and to a smaller oxtent-in this country; partly by nn eXcesiive exhibition' of "prodilctivo assets,"'.which is necessary both to meet adverse critioism and to support credit. ' The main interest of the Christchurch jourrial's interpretation ;of . the Governor's' Speech, however, is its ovidencc of' th'e uneasiness of the Government,. Sir JoßEfii Ward would not bo bo ansioua to m&ka tho public debt appear illusory li

he were not convinced that tho figures are at . last growing too strong for him, too heavy to juggle with, too large: to conceal. Anxiety of this kind, oven although it at first drives the Prime Minister to resort to. a book-keeping device to dissipate the public dobt by entering it upon another page, must be taken,aa the stirring of an awakening conscience, and it is therefore a welcome sign. When tho Bill dealing with the subject comes before Parliament tho exact form of the proposal will require close scrutiny, and it may prove productive of good results in other directions than those intended.