OUR FINANCIAL METHODS.

Dominion, Volume 6, Issue 1605, 23 November 1912, Page 14

OUR FINANCIAL METHODS.

A SUGGESTION FOE THE MINISTER FOR FINANCE. Sir, —In view -of tie coming visit to London of the Minister for Finance, would it not bo advisable to offer some editorial comment on the method to be adopted in financing this Dominion in the future? The fact that the childish mismanagement of the preceding Minister for' Finance is now appreciated at its real value by even tlio man in the street is entirely due to the vigorous and continued criticism of your columns, and for this you have earned the sincere thanks of every citizen who at all understands the question; but it is not yet time to slacken your efforts towards improving the position. I have'noticed that the Hon. Mr. Allen has not disdained to profit from your articles in the past, and have no fear that any suggestions you may offer will be slighted. It is now obvious to all that it is desirable to float all our loans for a lengthened period, and avoid the constant accumulative conversion charges of the past; and a period of 80 years would 6eem to be a reasonable time to allow any loan to remain unpaid by a nation having any pretence of restricting its borrowings to reproductive public works. Certainly the value of <any engineering structure whatever would bo seriously depreciated after 80. years in t'his inventive age. The question of providing a sinking fund for each lean cannot 1m dealt with off-hand. Between tlio two absurdities we have in operation in our national financial life (one being the providing of an amount sufficient to liquidate the loan in a reasonable period, and then investing that amount in "giilt-edged," and therefore low interest-bearing, foreign securities; and t'he other being tho visionary scheme made ridiculous by the absurd claims of its promoters, that it would bring about the abolition of our National Debt) >n sensible "via media" may exist. A sinking fund of two per cent., invested annually at i per cent., would pay off tho loan in SO vears; and if the fund were retained in the colony and invested through the State Guaranteed Advances Department, considerable advantage might result. In the first, place,, it might result in more favourable term's being obtained for our loans (though this is unlikely); in the second place, it would mean the provision of a certain amount of our .capital expenditure by tlie people of New Zealand, and to an increasing 'extent reduce' our- dependence 011 the London market; in the third place, it would foster a more self-reliant feeling, and be a tangible expression of, fli'o theory that this generation does owe more to itself and posterity- than the "boom, borrow, and bust" policy of tho discreditable past; "and, fourthly,.-an imposed annual payment of 6 per cent. 011 every million borrowed mignt give pause to our future politician and his inevitable electioneering projects-at the public expense. Tlie point is that such a sinking fund would probably ensure the setting aside of taxation that would otherwise be squandered or lemitted—it is a weakness of human, nature that such incentives to economy' should be necessary, but it is a fact. If all our loans for ,new works and renewals were floated on these terms in the future, it would not be long_ before quite a respectable sum was being set aside year, and tho gradual nature of the increase would prevent any embarrassment to the Treasurer-of the day. As a student of John" Stuart Mill, I recognise , the fallacy of such a scheme among n nation of. 'economic man," but as one looking for the provision of something "not too good for human nature's daily food," I can see considerable hope in it. Do you see any?—l am, etc., - .. A LABOUR- VOTER,