THIS Grey River Argus PUBLISHED DAILY. WEDNESDAY, FEBRUARY 11, 1874

Grey River Argus, Volume XIV, Issue 1723, 11 February 1874, Page 2

THIS Grey River Argus PUBLISHED DAILY. WEDNES DAY, FEBRUARY 11, 1874

Our Jielegratns conveyed the information a few days ago that the Provincial Council of Nelson had not only agreed to the proposal to borrow a quarter of a million, but that authority had been given to the Pro vincial Government to accept .an overdraft of £60,000 from the National Bank of New Zealand. In authorising the loan, and in approving of the temporary advance from the Bank in anticipation of the loan, the Provincial Council of Nelson evidently followed in the tootsteps of the Provincial Government of Wellington. It was admitted by the Provincial Treasurer in moving the Loan Bill, that one reason for proposing the measure in the form in which it was presented was, that the Provincial Government of Wellington had i adopted a similar course, with a very fair prospect of success. We have no doubt that Nelson ha 3 a fair claim to borrow the sum considered to be necessary for the opening up of the waste lands of the Proviuce, but we are inclined to think that the action taken in regard to the advance of £60,000 is likely to damage the position of the Province in the General Assembly; not that the money will not be well and pro6tably expended, bat because the overdraft or advance— whatever it may be called-r^ directly opposed to the spirit, if not to the,, absolute text, of the law. Without quoting the particular Acts which affect Provincial borrowing, we , may state , briefly that the legislation, ot 1867 had the effect farst of all of consolidating the various Provincial Loans upon the basis of the credit of the Colony, and second, of prohibiting Provincial Governments from borrowing money except with the consent of the General Assembly. Further legislation gave power to the Provincial ■ Governments to accept overdrafts or to coniract engagements to the extent of a certain proportion of their previous year's revenue, but it was absolutely prohibited that loans beyond that limit should be undertaken. But, like most Acts of Parliament, the Loans Consolidation Act, the Pnblic Debts Act, and the Audit Acts may be. driven through by the proverbial coach and four. It is absolutely illegal, aa .the law stands, for any Provincial Government to exceed the limits prescribed by the Legislature with . respect to overdrafts or advanoes from Banks or other leaders. of, money ; but the penalty of the illegality rests entirely npon the lenders who choose to advance money upon the bare moral credit of the borrowing party. Should any Bank lend money outside the lirait3 prescribed by the law, it does so with 'its eyes open to the. fact that it has no legal r remedy against . the borrower should he fail to perform his engagements. At the same time, however, there is the conviction on the part of the Banks that under whatever circumstances money is advanced upon the public credit, the Colony will see that due repayment shall be made. It is this feeling of confidence in thepublic credit which accounts for the readiness of the Banks to make advances , to. the local bodies ur.oh what would, under, other circumstances, be considered very shady security. After all, however, business of this kind resolves itself entirely into; a question of credit, and we consider that it is a fair and a reasonable thing for a Bank, or any other money lender to give, almost unlimited, credit to any Province, pro r vided that the money to. be borrowed is : to be expended upon works of a reproduce tive. character. :It may deprive the lender of a remedy should he advance money outside the legal borrowing powers of the Provincial Government, but the risk of any attempt at, repudiation is so remote that it ■is Really 1 not wbrtli tonsidering. The General Government we know looks with great jealpusyupon the question- of further Provincial ; Loans. It is feared that the introduction, of fresh applications for money .for Provincial purposes may deteriorate .the value of the Colonial securities, and to that extent damage the credit 'Of the Colony ; and last session of '-Parliament the Government brought down a measure' which was designed for the purpose of overcoming the presumed difficulty, by giving to the Provinces independent.powers of borrowing upon specific security without the necessity of reference to the .^General Assembly at all. This attempt at a compromise utterly failed^ and the law now stands as it stood before^ that no Province can borrow except with the consent of the General Assembly. It is not likely that after the experience of the last session the Ministry will again attempt to give individual power to the Provincial Governments to borrow, whatever may be the security which they can offer. .The sense of + he House last session was entirely in the direction of " letting well alone" — that is to say, to- allow the Legislature of 1867 to remain intact. The Premier, in his celebrated speech at Dunedin, hinted that he had arrived •at this conclusion, and that he had so far altered ,his previously expressed opinions as to think that each Provincial; Loan Bill should receive the sanction of the Assembly. We have no. doubt that next session any well considered Bill for the purpose of borrowing money for necessary public works will be carried. The Nelson proposal to borrow L 250.000 will not shock the House at all, if only the schedule of works can be shown to be of a useful and reproductive character. And if Westland applies for a loan, it will almost certainly obtain it, if the works, upon which it is to be expended are likely to increase the value of the public estate. But we much question the policy pursued by Mr Curtis in travelling outside the strict letter of the law to obtain the temporary assistance of au advance of £60,000. Of course there i 3 nothing to prevent his availing himself of the offer made to him by the National Bank, but as a ; q uestion of policy we doubt its soundness. If our ; telegrams from WellingtOrtare correct, it would appear that the 'Government has determinateiy.set its face against the surreptitious borr^^ing; initiated', by Mr Fitzherbert, and' that it, will lipt allow temporary adyance,s ,,, . against; t.he , ,pi lisibility ( >f obtaining legal borrowing powers. We do not

think that the Government lias any rij^lit t>) interfere in any parole t>;i^.ihi3 that may be made between Locil Authorities | and Bankers or other money lenders. The restrictions imposed in 1867 simply defined the limit of the liability of the' Colony.. So far as the Provinces were concerned it amounted to this, that except under the authority of the General Assembly they should not borrow so as to involve the security of the Colony. There is nothing in the Statute BdoV which really prohibits Provincial Governments from borrowing upon their personal credit, without any special security of any kind. But we are informed that the General Government has decided torecommend the Governor to disallow the Appropriation Act passed a few days ago by the Wellington Provincial Council, with respect; to an advance of ■; £50,000 from the Bank of New Zealand, on the grounds that the advance is illegal, and that the Provincial Auditor had no right to endorse the warrant of expenditure sent to him by the Executive,- although the expenditure itself had been specially authorised by the Council. It is said that the Wellirgton Provincial Auditor is likely to be dismissed on account of his having given his authority, but we doubt the correctness of the report. It is not the business of the Auditor to judge or express any opinion upon the policy of the Provincial Executive. It is' sufficient for him that he has the authority of the Council for a certain expenditure, and that the Superintendent's warrant is duly issued. Whatever may be the fate of the Wellington Appropriation Act, it is certain that the same measure will be meted but to Nelson. If it is illegal aad absolutely immoral for Wellington to borrow without security £50,000, it must be equally, •or more so, illegal and immoral for Nelson to borrow £60,000. We do not think that the question of legality or morality is likely at all to influence the main question, but it as well to point out that with regard to the proposed loan of £250,000, it is first of all possible, if not probable, that the authority of Parliament may not be obtained ; and second, that the overdraft of £60,000, if taken, will be such an evasion of the law as to damage the chances of the Province obtaining a loan at all. ■■'-." : ."'■ '-.■■'