THE FINANCIAL CONDITION OF THE COLONY.

Nelson Evening Mail, Volume XI, Issue 143, 8 June 1876, Page 2

THE FINANCIAL CONDITION OF THE COLONY.

I [COMMUNICATED.] No. 111. When Major Atkinson made his Financial Statement last year as Colonial Treasurer, he indignantly refuted :" the extraordinary apprehension which appeals to exist even among well-in-; formed people with' regard to the extent to which interest upon loaus has been paid out of borrowed money." (P. 5.) The honorable gentleman concluded his ;explsn. ation by, saying : — V The whole arrangement is, as honorable members 1 will see," merely a convenient mode of ' avoiding, the: payment of exchange, and [nothing more,", Npw considering the | millions borrowed during the past few ■years, and the fact notorious to all that ; the larger part -of the expenditure of the colony has been met out of loans, lit does npt seem of very much importancewhether th'emterestis pai^oUt of ione fund or out of another. Tho eixicessive carefulness of the Treasurer on jthe subject reminds one of Mr. Mieawber's scrupulous exactitude in his money matters. Thai gentleman, it will be rememberer^ on one occasion spoke as jfoHowB:— «« My friend Mr Thomas Traddies has, on two several occasions, put jhis name, if I may use a common expression, to bills^ of exchange for my accommodation. On the first occasion Mr Thomas Traddles was left, let me say in short, in the lurch. The fulfillment of the second has not yet arrived. The amount of the first obligation -" [here Mr .Micawber carefully referred to papers jiist like the Colonial Treasurer] " was, I believe, twenty -three, four, nine and a half ; of the second, according to my entry of that transaction, eighteen, six, two. These sums, united, make a total,, if my "calculation is. correct, amounting to forty-one, ten, eleven and ja half. To leave this metropolis, and my friend Mr Thomas Traddles, with■out acquitting myself of the pecuaiary part of this obligation would weigh upon my mind to an insupportable extent. I have, therefore, prepared for my friend Mr Thomas Traddles, and I jnow hold in my hand a document, which accomplishes the desired object. I beg to hand to my friend Mr Thomas Traddles my 1.0.JJ. for forty-one, ten, eleven and a half, and I am happy to recover my moral dignity, and Jto know that I can once more walk erect before imy fellow-men!" ; The Colonial Treasurer says, " The practice, then, is to pay the interest and sinking fund (which is [are] chargeable on the revenue) out of Public Works funds in London, and on receipt of the Crown Agents' account in the colony, to charge the interest and sinking fund so paid to the Consolidated Fund." * * *. " I may state that the sum of £150,000 to which I have re/erred as a standing advance from the Consolidated Fund to the Public Works Account in the colony was enlarged to £180,000 on the 26th February lasfc, and by my "direction a further sum. of £97,163 4s 7d was advanced from the same fund to the Public Works Account on the 30th Juno last, in order to cover the total jinteresfc and sinking fund payable out of Public Works funds in London up ;to the 1 5th July now current. Honorjable gentlemen will observe that not only is the whole of the interest and sinking fund from time to time payable ;in;London covered fchroughont the year by an advance from revenue 'made to the Works Account 'in the I colony, but that, as respects the interest and sinking fund due in London on the 15th JJuly, the transaction has been made fifteen days in anticipation of the liability." Just like Mr Micawber! The second bill given by Mr Thomas Traddles 1 had not fallen due, yet he gave an 1.0.TT. for the full amount! Now let us see how this statement of the Colonial Treasurer is borne out by the public accounts. The two sums of £180,000 and £97,163 4s 7d amount together to £277,163 4s 7d, which iff will- be observed was 1 advanced from revenue to repay the Public Works Fund the amount that had been spent out of it for interest and sinking fund. The transaction was then complete. It was, as the Colonial Treasnrer very properly said, a mere matter of convenience, to avoid the expense of exchange. But now comes the curious ,parfc of the affair. In the. course of the quarter ending December 31st last, the fund is in difficulties; and the half year's revenue has to be met, besides the usual expenditure of the quarter, and the revenue will not suffice to meet the outgoings. So then to help it out the following item appears

in the statement of receipts and expenditure for^tthe ■■... quarter among the receipihof th6 > Cohsolia l ated Fund (New Zealand- Gazette January 20th, 187 V 6.^ p. 44): — " Erom Public Account| in repayment of sums transferred theret<s! to prpyide for interest,' &c., payable ifi| Lqndon^ £277j163 4*S7&" So that ffl appears that not a penny of this sisp^ was finally paid out of the Consolidated Fund. First the money was paid out of the Public Works Fund; then ifc was paid back oat of the Consolidated Fund to, the Public "Works F'und ; then the? Public "Works, Fund ; three month's t afterwards pays it back again to the Consolidated Fund ! Now it so happened that the charges for interest and sinking fund in .the December quarter amounted to £282,080, so the repayment from the Public "Works Fund nearly met the amount. In the quarter ending 31st March, the revenue was again insufficient to meet the expenditure, and! again" the Public Works Fund was bled — this time to the amount of £150,000. Even this did not suffice to set things squar^ianid"' the Treasury had ,to borrow froni the Bank of N^ew Zealand the sum of £60,000 ori. the security of Treasury Bill*— (New Zealaud Gazette, May;l>ty p. 340), It is perfectly clear,. therefore/ that we are paying interest out of loans, and,- what is more, unless some kddU tional revenue is obtained, or unless ;we : reduce our expenditure, we must con-,' tinue to pay intorest out of loans. s"' But to do this we shall hare to r gpet fresh loans, -for .to issue the 'uniaauejf balance ot authorised loans. The four millions, or rather' 1 the £3,600,000^ obtained in March, 1875, has. all ; gqnj%s and the Public "Works Fund was" on March' 8l, ! 1876, in debt ! td the 'amWnt of £14^,0. It is true that there some advances to be. accounted for. jbufc, we may be pritty sure that i they \j?itr be acebiinted for, and that ; the Colonial Treasury will never see them any more. The. .Colonial .Trtasufer £n his Financial Statement said that the expenditure of the four million loan would bo spread over two-yeara,-~it has all goneia.lfl»| than a year. " - l^bre' debentures ""n"aw been sold since, quietly, but no very largt amount can be forced upon the -money market. If the Colonial Treasurer's statement is p exact, that the colony was to receive £&0' 198 7d net for every £100 debenture of the four million loan, the total sum -we should have to receive would be £3,639,166 13s 4d. Of this there was received in the June and September quarters £3,598,103, so that we had thenrer ceiyed the whole; loan except !about forty thousand pounds. But in the December quarter we find that debentures to the amount of £292,705 were sold, or about two^ hundred, and thousand more than the four million loan would bring in, and. in the, quarter ending March 31st, 1876, there was a further sale of debentures to the amount of £117,630, making f a .total, of nearly three hiindred ; and seventy '• thousand borrowed since that loan was Bpent. [TO BB OONTINUED r ] - „.