The Evening Star THURSDAY, APRIL 17, 1873.

Evening Star, Issue 3169, 17 April 1873, Page 2

The Evening Star THURSDAY, APRIL 17, 1873.

Our contemporary, the Daily limes, is quite elate with the financial theories of Sir F. D. Bell, as said to have been enunciated by him at Invercargill. Although we consider it quite possible the tefegraphic summary on which the pean is founded, may have led to erroneous conceptions of what ho did say, it does not matter much. The Times has seized the idea, and, with its customary folly, has taken the oppoitunity of doing all in its power to damage the Colony, by discussing a questionable point in finance in a number specially intended for circulation beyond the limits of New Zealand. Were the people at Home as ignorant of the principles of finance as the writers connected with the Daily Times appear to be, we should fear the consequences of such an illtimed article. Happily, however, so far as our credit is concerned on the Stock Exchange, it will fall under the notice of those who will only laugh at the imbecility displayed in it ; and the chief damage likely to accrue will be distrust of a country subjected to the teaching of such journals. For our own sakes the question of taxation lequiies to be properly considered. It does not matter whether error is disseminated bv a knight or a squiie, by Sir F. I). Bell, Sir David Monro, or the Times, its mischief is equal. Our contemporary characterises our financial system as “ folly and rottenness,” and rejoices that Sir Francis is having his eyes opened to it. We are not favored with the reasons for this sapient conclusion, nor with any proof of the “ folly and rottenness ” condemned; but since Sir Dillon Bell says more money must be borrowed, more taxation will he required to pay the interest, and that interest should be paid out of revenue, nob out of the loans, we presume _ these assertions present justification in the eyes of the Times for the imputation. Without further comment on the matter, we will adopt the recommendation “ to consider the question of the day thoughtfully” in hope that our weak contemporary may profit thereby. Throughout much that has been written about “loans” and “interest” in New Zealand, there has commonly been no care taken to discriminate between loans, the principal of which, when re-paid, must be drawn from taxation, and loans so invested as to produce a revenue, which will recoup principal and interest in the course of a few years. Yet there is a wide difference between them, although Sir David Monro, Sir F. D. Bell, Mr Stafford and his followers, and the Daily Times , make no distinction. It is to be regretted on this account that the same word is used to signify money borrowed to be wasted in war, and money borrowed to be invested in railways. We should therefore, for the sake of clearness, like them to be called by distinctive names, pointing out that in their application one is truly “a debt,” the other “an investment:” for one the country possesses nothing : for the other, it can show an industrial appliance : the money spent in war is utterly wasted, and the more that goes in that way, the poorer the country is; but for every pound spent in railways the country is richer, its territory is more valuable, and the security it can offer the public creditor is the greater. The essential difference between the two is that, with regard to the interest on money spent in war, there is no other way to pay it than out of current revenue; but it becomes very questionable whether it is fair to the taxpayer to pay the interest of money invested in railways, out of revenue raised for general purposes, i.e., current revenue. We do nob see why railways constructed by a Government should bo treated differently from railways constructed by private companies. Thoughtfully, then, let us follow out that process. A number of capitalists agree conjointly to construct a railway. In order to raise the money, they must either borrow the necessary amount, or subscribe it out of their own funds. During the time that it is ip. course of construction, no revenue is derived from it; but the interest has to be paid either directly or indirectly. If on money borrowed, directly : if on capital subscribed, by submitting to receive no interest on money that, if invested on mortgage or otherwise, would clearly have yielded a revenue. Now, whence is that interest, paid or sunk, derived r ( Clearly not from revenue, for there is none. It is paid out of the amount borrowed, or added to the amount invested, and becomes part of the cost ■of the work. Yet no one charges a private company with “ folly and rottenness” for following out a plain, com-mon-sense business principle. It is one on which Sir David Monro, Sir F. I). Bell, Mr Stafford and others would act, and one, we take leave to say, which the Daily Times is at this hour adopting in the construction of their new premises; the value of which would otherwise have been distributed in dividends amongst its shareholders. But assuming that such straightforward business principles should not commend themselves to our legislators, and that they propose the very unlikely theory ot paying interest on special loans for reproductive works out of ordinary revenue, we shall bo among the most decided opponents to a measure. The notion of imposing u : u income taif for such a purpose would he monstrously unjust, although the party represented

by Mr Stafford and Sir D. Monro are just the people to attempt it. To do Sir David justice, however, he had not the boldness of Sir F. D. Bell, for he did not dare to advocate it. And on this point, the difference between loans for general and special purposes must be borne in mind. Although railways benefit all classes, the advantage conferred is directly on some, and indirectly and remotely on others. Owners of property through or near whose land they pass, and the value of which they multiply many fold, are directly benefited ; and they it is who should be taxed, ifany additional taxation is needed. They have bought their land subject merely to the expectation of having access to it through common metalled roads, and they have railroads constructed, on the security of the Colony, at low cost compared with what they themselves could have made them. Property bought at a pound an acre thereby becomes worth five or ten, as would be proved by offering unsold land of equal quality within the range of benefit conferred by the railroad, and if any one is asked to pay deficiency of interest, rather than add it to the cost, it should be they and not the public. It will be seen then that either our contemporary is utterly ignorant of sound business principles, or sacrifices honor and honesty to party purposes. In either case, New Zealand should feel ashamed that such articles are monthly sent from its Press to bring discredit upon us at Home.