THE TOWN HALL.

Evening Star, Issue 4133, 26 May 1876, Page 4

THE TOWN HALL.

To the Editor,

Sir,—Promising that this shall be my last on the subject, I trust you will allow space for insertion. Not having the run of the Corporation baoks, I have endeavored to deal with general truths rather than details—truths which 'should be self-evident to every ratepayer—the leading feature being that in say seventeen years’ interest, at the rate of 6 per cent, per annum, will amount to the capital of a loan, and that the Corporation was spending borrowed money at this rate of interest at least—that this interest, added to the amount borrowed and to be paid back, would be a large sum indeed, and proportioned to the currency of the loan. In the the City waterworks loan issued in London in March of last year not one word is said about a sinking fund and annual drawings—the bonds being payable at par on Ist January, 1925, say fifty years currency, if these works were bought for about L 120,000 the actual cost must, therefore, be four times the amount when the bill is met at maturity, inclusive of interest paid half-yearly in the interval, or say nearly L 500,000; and it would be interesting to know what these works will be worth at that date ; how much expended for repairs, &o. ? Already they are unable to overtake the demand for water in summer, and the amount* that can be raised on them is limited to the first mortgage bonds of L 200,000, any infringement of which would be a breach of contract with the holders of these bonds.

Sinee this loan was raised I have not in the papers at my command, and in which such matters are usually announced, been able to find any trace of a subsequent loan for the City, and it would be well if this were cleared up by those having command of the official records, stating the purposes for which, according to the prospectus, such loan was raised ; whether anything was said in the prospectus about L 25,000 being required for a Town Hall, &c. The following fuller extract from the City article of the * Times,’ 18th May last, wiU give a very different aspect to Councillor Leary’s figures and his calculations re a sinking fund, which is invariably accompanied with annual drawings’(a lottery) to pay off the loan at par very soon after the loan is raised:—

Taking into account the number ol years which the borrower gets the use of the money for the best-priced and longest-running loans mentioned below are obviously extravagantly dear, some of them ruinously so. They would be dear had the borrower the use of the whole of the money throughout the entire period, but considering that the amount of the capital left in his hands is a diminishing quantity year by year it is not possible to estimate the retd excess of cost which pernicious system produces. Yet it is a system which has grown extremely prevalent of late years. It panders to a taste for speculation, and seems to please lenders who may not care to look very closely to their security. No borrower tbat cared for his financial stability in the long run should lend himself to such a system. The exactions of private usurers are not more rninons to thevictims of them than it is to those in its toils. The borrower does not keep the capital for the whole period; on the contrary he begins paying it off at once, and to anyone who knows how long it takes capital in most instances to fructify so as to reproduce itself with usuryhow rarey, in fact, it ever does so—it will at once be evident that capital borrowed on these terms for reproductive purposes must, in nineteen cases out ol twenty, prove a mere delusion and a snare. If reproductive works are prospering, their tendency is to require more capital no) less. There is no different Jaw regulating the business of a State from that which contools the growth of the operations ol a private firm. Onr English railways—the most prosperous of them ~-are not in a position to pay back capital, they are instead constantly needing more, just because they are for the most part flourishing. Yet we find foreign States, companies, trusts, corporations of all kinds, proceeding on an assumption contrary to all facts,- borrowing at heavy iates only to begin paying back, without giving the chauce to capital to take root and fructify. It needs no demonstration to prove that business done in this way is most unsound; to often it proves most ruinous.

It is now evident that the financial prospects of the City are most critical. Under any circumstances our credit in London must necessarily be very limited. But what is to be thought of such a small community borrowing at such rates of interest in order to pay tens of thousands for such absurdities as Princes street widening, tens of thousands for a town hall, and some thousands more for a carriage drive through the Town Belt; also, buys out wealty proprietors like the owners of the Water and Gas Works, and practically without any capital of its own. In their dealing with communities or individuals London capitalists trust infinitely more to character than to legislation enactments, prospectuses, estimates, &c. The most urgent and pressing matter before the ratepayers is a system of drainage. Science has repeatedly raised her warning voice on this subject, and as if for a final intimation scarlet fever made its appearance in a mild form this summer, but with an exhausted credit in London, a system of drainage becomes impossible. It is about time the ratepayers acted as men and not children, and unanimously requested the present holders of I office to resign their trusts, for it would be I invidious to make any distinction. The I

Princes street \ridemng affair of itself ought not to be condoned. After all the efforts of the ratepayers to get onto! the mess—efforts which were crowned with success—the Corporation immediately plunges into it again at a difference of cost which is almost nominal If the ratepayers fail to act at once, they will richly deserve the retribution in store for them.—l am, Ac., Dunedin, May 25. Ratepayer.