The Evening Star TUESDAY, MAY 16, 1876.

Evening Star, Issue 4124, 16 May 1876, Page 2

The Evening Star TUESDAY, MAY 16, 1876.

It appears from Sir Julius Vogel's last letter to Mr Macandrew that the Government contemplates laying before the General Assembly a Municipal Corporations Bill, which will contain special provisions for regulating municipal borrowing. This part of the measure, it is added, will be similar in principle to a Bill produced by a private member last session, which was received with a chorus of praise by the limited number of members who happened to be in the House when the Bill came on for second reading, none of whom

ieemed, however to have inflected upon it« probable effect* If ,va ;asd ; but, by a i fortunate hoc' uk-ui, rc was rejected by the Legislate re Council after it had got through its second reading theie and was on, tlw» high road to become a legal enactment. Save for this happy chai wse, every municipality in the Colon; f would now be in a position to run into debt to anv extent it pi eased, without check or control from a: ay outside body. The Bill proceeded c <n the fallacious assumption that the no! torious extravagance of the municipalities in the way of borrowing arose from the prodigal disposition of

the Borough’. Councils, which dragged the reluctanfe ratepayers into the hands of the money-lender, willy-nilly; whereas the- true state of the case is just the reverse. For the most part the fount and origin of a municipal loan has been the desire (not unnatural in itself) of the ratepayers to have civic works executed far more quickly than the unassisted income of the borough would allow to be done. There may have been occasional instances to the contrary, but as a rule Borough Councils have incurred loans in order to meet the wishes of the citizens.

There is nothing so popular in a borough as the spending of money. A councillor who aims at distinguishing himself for his “ progressive ” tendencies knows perfectly well that the surest way of gaining such distinction is by advocating the execution of some costly work, and every newly-elected Mayor with a soul above buttons must long to associate his name with something greater than the repairs of streets and the cleansingof gutters. In the eyes of the citizens the benefits resulting from a loan are immediate and visible, the inconveniences attending the payment of the interest invisible and afn* off. Besides, are not all these works done for the benefit of “posterity?” Lucky posterity! It will have no landed estate to bother it; all its roads and bridges will have been constructed by its thoughtful predecessors ; its railways made; and harbors created on

every part of the coast where Nature had intended there should not be a harbor. Its sole duties will be to pay interest upon the loans incurred for all these fine things, and to renew the little bills as they full due. In order to check the supposed borrowing proclivities of the Borough Councils the bill in question made provision by which the ratepayers themselves would decide, by a direct vote, whether or not any particular loan should be borrowed. All the Council practically could do would be to take the initiative; while, on the other hand, the General Assembly, whose permission has now to be obtained before any municipal loan can be raised, would be altogether deprived of that wholesome control. The first proposal seems unnecessary, and the second extremely objectionable. Surely, if the ratepayers disapprove of any projected loan, they are able, under the present arrangement, to appeal to the General Assembly, and such an appeal would certainly never be made in vain. The Assembly has always shown

a wise jealousy of municipal loans, and has on two or three occasions refused to grant applications for them, but we cannot recall to mind a single instance where a large body of ratepayers have petitioned against a loan. Borrowing, as has already been remarked, is far too popular; and while the prudent ratepayers of a borough may have remonstrated against an increase of debt, their voices have been drowned by the clamour of the imprudent. If the matter were referred to a plebiscite, the wise would go to the wall just the same, overwhelmed by the majority of votes, with the difference that whereas now the minority can lay its case before the General Assembly, under the Bill which the Government seems to have in view that resource would be cut off, and the decision of the unthinking multitude taken as final and conclusive.

It is of the last importance that the General Assembly should retain its controlling function over municipal borrowing. No exemption of the Colonial Exchequer from liability for defaulting boroughs would save the Colonial credit from injury, if any of the municipalities failed to meet their engagements; and still greater mischief would be done to the credit of the other municipalities. These bodies are now looking to the London money market as a source of regular assistance to them; and it would be quite sufficient for one borough to be posted on the London Stock Exchange as a

defaulter to make lenders light shy of New Zealand Corporation debentures ever after. They would not stay to draw line distinctions or to examine if the case were exceptional ; they would simply note the broad fact that a New Zealand Corporation had failed to pay its debts, and act accordingly. It is hopeless to expect prudence from the municipalities themselves. The smaller boroughs are the worst. Their principle seems to be to borrow as much as they can get, and trust to luck and good times to enable them to meet the loan charges. Some of them, of course, may, by good fortune, bear the load of interest easily: but others, we fear, will repent their present heedlessness in sackcloth and ashes. A comparison of their ordinary income and expenditure, with their loan accounts, is simply appalling; and the insecurity of their financial position is aggravated by the circumstance that they have no lauded endowments worth

I mentioning to fall back upon. It would | be ntser folly to lead such, boroughs into ifuiptatiou by empowering tie m to decide for themselves upon the propriety of raising loans for borough purposes. They might be prudent enough to refrain from incurring liabilities which would entail bankruptcy; but inordinate borrowing would involve taxation so heavy as to retard the prosperity of the boroughs, while it would fall upon the innocent and the guilty alike. The self-interest of the lender is by no means a sufficient check upon extravagance. If he resides at a distance he is seldom able to investigate closely the nature of the security; and the immense sums which Hondnras borrowed in Europe shows that even where the security is obviously too limited, loans can still be raised, although, of course, at a price more-or less commensurate with the risk. From every point of view the General Assembly is the proper authority to say yea or nay to any municipal loan that is proposed.