COMMON-SENSE AND NATIONAL INDEBTEDNESS.

Dominion, Volume 3, Issue 913, 5 September 1910, Page 6

COMMON-SENSE AND NATIONAL INDEBTEDNESS.

Under this heading the London Spectator of July 16 , deals editorially with a subject that is particularly, interesting f to. New Zealand at all times, and especially in its interest -J-just: : now, when Par-, liarnent is engaged -upon', the. Government's' misleading '.. pro-, posal for "the 1 , extinction of the : . public debt."- The figures relating to the national indebtedness of (Britain are extremely large, but extremely moderate when compared ■with the. New Zealand figure's on a basis of relative' population. The public debt of' Now Zealand 'is roughly £70,000,000, or £70 per,headof the 1 , population;- as against £741,000,000, or about £16 10s. per head, in Britain. :,lf the indebted-, ness per head was 'as. large in tain as. in New Zealand, the total National Debt there would ' be roughly £3,ooo,6oo,ooo—three' thou 7 sand millions of Since 1903 the gross debt of Britain has : been'reduced by £57,000,000, and the Spectator is perturbed at the slowness oi the,pr,ocess of repayment, although 'it gives the Liberal Government full credit for having done, the bulk of such debt-reduction as has been done. Mr.Asquith is specially praised because he gradually abandoned, so far as military and naval works were concerned,: the practice of borrowing for'short loans, "and to this extent put a 'stop to the folly of borrowing with oho-.-hand while paying off Debt with the other.'' What term, wo wonder; would- the Spectator, or any other sound Bri T tish critic,, apply. to- Sie 'Joseph Ward's policy of borrowing a couple of million pounds every year and setting- aside £4460 a year ? -Discussing the necessity for paying off the cost of the South African war with all speed—£s7,ooo,ooo in eight years is quite 'inadequate—the Spectator makes an observation npoii borrowing for war that is" true of borrowing generally, whether ■■' for post offices or tarpaulins: "One of the hest means of preventing lightheartedness in such a matter is to bring home to the existing generation of taxpayers the'responsibility' for, the cost of, the war which, they, sanctioned." :'.''•

As an argument against borrowing for public works—Britain's cast; is here different from the case of New Zealand—there is quoted Mr.;' Gladstone's opinion that "a great un-, dertaking like the United Kingdom needs no ,ca|JiUl: account.'' New Zealand, unfortunately, has a very large and disagreeable capital account—indeed, its finances consist mainly of capital account, but the time.has arrived when there should ,be a material tapering-off of borrowing, such as: we should have seen long ago had not Ballanck died and left the field to.the plungers. 'It is far better, the Spectator thinks, that public works should be paid for out of revenue than that the nation should be burdened for many, years with an interest charge upon a temporary debt, and there is a further consideration -which needs emphasising even more here than in Britain: Jf a Minister has to justify expenditure ofit of revenue he is much more iikely to be cautious than if he Ban come to the House of Commons and ask for a loan which future generations will have to pay.' It is, in fact, a truism, both of private and public life that borrowers spend more recklessly than' people who face their liabilities as they go along. . .;:.'■ Another point of very great import-,, ance is the. part.which -the local bodies play in swelling the national indebtedness.. We generally speak here of tho public debt as the indebtedness of Die General. Government, which is about ,£70,000,000, but it must never be"; forgotten that to that sum must be added the money separately borrowed by local bodies, which now—we have not the exact figures .to date—stands at about £14,000,000. The following passage in the Spectator's article is strikingly true of New Zealand: There is :no doubt whatever that the expenditure of local authorities throughout the Kingdom lias been unduly swollen by the facilities given to them for borrowing. .... In the case of local authorities the principle must be admitted of borrowing for exceptional' expenditure of a permanent character; but while this principle is admitted, it must bo safeguarded by the establishment-of a sinking fund which will rapidly pay off the loan. At present the sinking funds maintained by most of the local authorities are altogether , inadequate , . The aggregate debt—local and .national—is £1,341,000,000, -or about .£3O per head. "These arc extremely serious iacts," says the Spectator, voicing an opinion undisputed in British- financial criticism,. "in view of the constant increase of current expenditure, and in view of the decline of public credit." Thirty pounds a head—a serious fact. In New Zealand the debt—local and national—is over £80 a head. And Sis Joseph \\ t mw thinks ; ,it a trifle, 1 ;