The Fielding Star. Published Daily. WEDNESDAY, APRIL 18, 1894. A FINANCIAL FALLACY.

Feilding Star, Volume XV, Issue 291, 18 April 1894, Page 2

The Fielding Star. Published Daily. WEDNESDAY, APRIL 18, 1894. A FINANCIAL FALLACY.

Our contemporary the Post had the following very sensible article on the subject of cheap money in its leading columns a few days ago : — lf people would take the trouble to reflect a little they would rapidly perceive the humbug and insincerity of the Ministerial professions of a desire to supply the people with cheap money. It is the Government itself which id one of the chief factors in making money dear. It swallows up for Government expenditure almost every penny of trust money it can lay its hands on. It pays as interest on this money a much higher rate than that it could borrow at in the open market, and the money it absorbs is diverted from general use. If the Government did not use these trust funds the money would be available to lend to private borrowers at a comparatively low rate of interest, which would yet yield a profit to the State. This money being so available would tend materially to keep down the rates of interest on private loans Thft Government now not only enters into competition with private borrowers, and by so doing makes money scarcer than it would otherwise be, and thus keeps up the interest, but it borrows money itself at n much higher rate of interest than that at which it could procure money in the open market. If the Government would give up this extravagant system of borrowing on the sly, and openly raise money for its own requirements, it could procure all it wants at 3i per cent., whereas it now pays 4 or 4£ per cent., or even more, for money which it the Government did nob absorb it could be lent at 5A or G per cent to private borrowers, to the great advantage ot all parties The Government manipulation and absorption of trust funds not only helps to make money scarce and dear to private borrowers, but it inflicts a great wrong on the taxpayers by charging the revenue with a much higher rate of interest than that at which the money required by the necessities of the colony could be obtained in the London market." If the Government went openly into the English money market to borrow, the Members of the Cabinet would thereby deprive themselves of their favorite cry of " Non borrowing and self reliance " and possibly thus dissolve the whole fabric on which their alleged policy is constructed.