The Dominiton SATURDAY, OCTOBER 25, 1919. SOMETHING FOR NOTHING

Dominion, Volume 13, Issue 26, 25 October 1919, Page 6

The Dominiton SATURDAY, OCTOBER 25, 1919. SOMETHING FOR NOTHING

In attempting to'justify bis pleasing theory of homes for the people at a ten-and-sixpenny-a-week rental; Sin Joseph Ward plunged somewhat recklessly on to dangerous ground. His idea apparently is that the Post Office Savings Bank balances can be appropriated, for the purpose of providing funds for house-building, hut it is plain that he could not have given tho matter much thought. It is a settled principle of all sound and prudent finance, whether private or public, that permanent and fixed capital expenditure should not be provided out of floating bank' balances_ or credits, and though this is especially the case with commercial banks, it applies also to all funds constituted by deposits withdrawable at will. While Savings Bank deposits are, in the jargon 'of the market place, good lying moi\ey, yet they are essentially short-term obligations, and therefore inappropriate lor permanent capital investment, which should be provided where required by long-term funded loans. It is, of course, quite permissible and pel-fectly. proper that tlje Government should utilise Savings Bank deposits under suitable safeguards and for appropriate purposes, but their main function should be to provide temporary funds for the disposal of the State'to tide Minister of Finance over the monetary interregnum of a conversion operation, or for temporary use as floating debt until funding is possible. There.is'great danger in their use in operations that look to permanent investment, nor does the mere fact that they are represented in actual assets affect this contention, for they should be readily realisable at short notice. It-is not easy either to see what advantages would flow from such an operation as is now suggested by Sir Joseph Ward, even if the purpose were carried out. Of about thirty millions sterling of deposits in our Post Office Savings Bank over twenty-eight millions are looked up in State and municipal obligations of various kinds, leaving only a small balance for the purpose_ of meeting the inevitable fluctuations of deposit and withdrawal. If this balance is raided for house-building the stability of the_ whole_ deposit system would bt} seriously impaired and public, confidence might be severely shaken, and this for tho sake of obtaining what would.prove to be but a small amount of the aggregate sum required for the housing'scheme as a whole.

Apart from the. serious aucstion of finance, the whole idea of building bouses for sale or lease under their cost, or indeed of nroviding any purely economic utility bv the State at less than cost, is fundamentally vicious for while a State m.ov justifiably carry on one or two services at. ft, loss because of the supposed social gains involved, passing • the bill on to the taxpayer, vet when-a State enters (be business arena at many points, it must tee that all its undertakings pay, and pay on the basisof honest accounting.and commercial management. Unless this Is done_ there will be a progressively he; ivicr strain on the Consolidated Fund, a heavier drain on the taxpayer, and a narrowing of the basis of taxation .as tlv; State encroaches more and more on what has hitherto been th« domain of private enterprise. The proposal amounts to taxing the community in'general.for the, purpose of supplying cheap accommodation to a few arbitrarily selected and lucky individuals, many of whom will nrobably be better able to bear the strain than (hose who are taxed 16 provide it. It is perfectly futile for the community to think that a housing scheme run at a Joss by the State.will cost them nothing, for not even the Government can get anything on those delightfully easy terms, and the scheme must be paid for, if not on the sound principle of making the users pay, then on the unsound principle of making the community pay For the benefit of the fortunate minority. Carried far enough, this would involve the conversion of a self-reliant nation into a horde of Stats pensioners and parasites, finally issuing in national bankruptcy and financial disaster. The public should realise that everything supplied to them by the State has to be paid for, and that the payment will come out of lieir own pockety because there is no other source from which funds arc available. The average citizen m this country seldom pauses to realise this fact, being convinced that funds for these purposes are in some mysterious manner that bo does not understand taken from the wealthy and applied for the benefit of the noor. There is no mistake more fata], for the necessary taxes, however laid in the first instance, are sure to diffuse themselves over ihe community in such a way that directly or indirectly they strike everybody, and sometimes in most, unexpected and disconcerting ways. The high cost of bousing and living will not be-met effectively-by a system of State doles and bounties, ■ however

camouflaged, but by more work, increased production, greater private and public efficiency. Only in this way, by harder work and more abundant commodities, can the present position, which is fundamentally a shortage of useful goods and services, be met and ultimately overcome. There is 110 short, easy, and inexpensive way overeating wealth. It must be the result of labour and saving, and can be created in no other manner.