The Evening Star FRIDAY, AUGUST 29, 1873.

Evening Star, Issue 3284, 29 August 1873, Page 2

The Evening Star FRIDAY, AUGUST 29, 1873.

Like all new projects, the Provincial Loans Bill appears likely to meet with strenuous opposition. We do not know that this is a disadvantage, for thorough discussion alone can instruct those who do not understand its principle, bring out its weak points for correction, and show to the utmost the advantages that may accrue through adopting it. It has long been the habit of Colonial Statesmen to point to the security the Colony was able to offer for money borrowed in its vast lauded estate. Mr Vogel, when a young politician, used frequently to refer to it, and in discussions on the various Land Bills the public creditor has continually been dragged. in and paraded us a most important personage. We have always looked upon such a being as a convenient character to introduce into the drama, for the sake of effect, whenever a little extra show of political morality was desirable to give spiciness to a debate, The “public creditor,” however, was never allowed to be present, even in spirit, when land was to be alienated. His claims were consigned to the tender mercies of the buyer, who has never for one moment hesitated to attempt to thrust the burden of satisfying them upon other people’s shoulders when opportunity offered. And so it has happened that now that all the land in some of the Northern Provinces has been sold, the Northern Colonists are looking with envious eyes upon the unsold Southern lands; and in addition to the war taxes they have been the means of laying upon us, like the horse leech, they cry “ Give, give” —“ Give us of your land to build, beautify, and adorn our cities, to make our roads and improve our harbors.” This continual grasping after what they have no right to, unless counteracted by special ! barriers, seems likely to embarrass the General Government. The construction of the main lines of railroad necessitates the formation of branches, and the formation of branches is likely to lead to all sorts of unholy contentions by representatives of different Provinces. Mr Vogel, in his financial statement, drew a vivid picture of the tendency to log-rolling that has been manifested in the House. He showed that it was impossible for the General Government to satisfy all the conflicting claims the Provinces were likely to put forward for assistance in carrying out necessary, or perhaps unnecessary works \ and still more impossible to ascertain satisfactorily the data on which the advantage derivable from them was based. It was, there fore, an unfair position in which to place a Government, to make them the arbiters of purely local works, so long as there was ample local machinery available. Wo think .it was a happy idea to avail himself of Provincial institutions, to relieve the General Government of the influences that would bo brought to bear on all sides, and to localise expenditure. New Zealand having been colonised from so many centres, puts forth claims to consideration from every quarter. There are so many children to feed that the common purse and common credit are too small to satisfy their cravings. They are of one family, but of jarring interests; and each little Colony is jealous lest its sister should be petted more than itself. Very possibly the Fitzhekbert and Bunny rebellion last session indicated to the shrewd Treasurer the family quarrels and time-serving cabals looming in the future, if steps were not taken to give each Province the means of pushing its way irrespective of the rest. The plan he has hit upon to check these has much to commend it. It is merely the application of a commercial principle to the affairs of the ►State. For the first time it is proposed that the “public creditor” shall become an entity and cease to be a myth ; and if this is effected the value of a public estate will become manifest. If the principle be adopted, when money is wanted the question will be considered—What security can we give 1 It will not do to say of works asked for at Oamaru or Waikouaiti by their respective representatives : “We have not hud our share of money spent in our district ; let us have some work done, even if we throw it into the sea.” The security for money borrowed is required to be “specific,” which in this sense means “local.” The utility of the work itself must determine its construction ; for the “ Provincial creditor” will base his claim upon that special work, and will have to ascertain the value of the security on which he lends his money before he

agrees to advance it. It is true that the Province which sanctions the outlay may be looked upon as the hidden guarantor; for no act of repudiation could be tolerated : but this will lead to thorough investigation of the payable character of the undertaking before it is sanctioned.

From these considerations the idea of restricting Provincial borrowing to the Colonies seems natural ; for the Provincial creditor will have ample opportunity of ascertaining the value of the security offered, and, if not satisfied with it, will not lend the money. This could nob bo so well done if the Home market were available. But there is another reason, and a very valid one, why Provinces should not seek to borrow at Home: it would tend to lower the credit of the Colony. That is not a matter of theory, but of experience. To have Otago, Canterbury, Wellington, and other Provinces attempting to float debentures on the London Stock Exchange would introduce confusion : no one would kYiow what he was doing; for not only would it be necessary that the amount of indebtedness of the Colony as a whole, should be explicitly stated, but that of each Province in addition, and of the special security each was able to offer. Under the old system, before the Consolidation of Loans Act, Otago had to be content with £BO for £IOO stock. The difficulty was got over by the Colony taking upon itself Provincial liabilities, and it would be suicidal to allow a relapse into a system found so ineffective. We do not know that the provisions of the Act necessarily debar the formation of companies for specific purposes ; say for instance a Dunedin Dock Company, for the conversion of the Upper Harbor into one magnificent dock—a plan, we believe, quite possible at a very small expense. But here the security would be specific, and hoAvever Provincial the object, it would tend to add immeasurably to the value of all other properties, not only in Dunedin, but Otago. We look upon the creation of a Provincial Creditor as a step calculated to teach us the true nature of property on land. Every man understands it individually when he mortgages his estate to construct houses or sink pits upon it to improve its value. But the Provincial estate has hitherto been regarded as something to be given away : flittered away in deferred 'payments, or sold for a mere trifle. It has never been treated as an improvable estate, capable, by good management, of yielding an annually increasing revenue, that would ultimately more than meet every requirement for public works, public buildings, defence, education, and good Government. We believe the creation of Provincial creditors will necessarily lead to sound practical views on such subjects, and give universality to the opinions held on them by the clearest thinkers and reasoners of our day.