GOVERNMENT FINANCING.

New Zealand Times, Volume XXXIV, Issue 5654, 14 May 1879, Page 2

GOVERNMENT FINANCING.

(I>i£K PRESS AGENCY.) Timaeu, Tuesday. The Herald has heard that several Government cheques have been dishonored, and that the impression is gaining ground that Government are as badly off as anybody else. In an able article on the present financial crisis, it says: The straitened circumstances of the Government is duo to the childish miscalculations o f the Treasurer in making his Estimates, and the extravagant manner in which affairs have been conducted, but that is no reason why the Government should be in the position of an insolvent debtor, as the Treasurer had power to issue deficiency debentures to the amount of £400,000. It says : We assume, however, that the reason why the Government does not pay its way just now is that from one cause and another the Colonial Treasurer has abstained from issuing deficiency bills, and wo want to know what the cause is. Several solutions of the problem suggest themselves to our mind. One is that the Colonial Treasurer anticipates such a heavy fall in revenue that he fears that even with the amount he is empowered to raise on deficiency bills, he will not be able to meet the payments which must be made, come what will—for instance on loans and other services, virtually involving the credit of the colony. If the hypothesis is correct, he is reserving his deficiency bills for the most pressing needs, and letting the ordinary creditors of the Government take their chance of payment. In the meantime, from what we spend from revenue from day to day, it is a happy-go-lucky Mioawber like style of financing. Certainly if things are as we have hypothetically described them, perhaps it is the beat that can be adopted. Another possible solution is that the Colonial Treasurer is ready to issue deficiency bills, but the bank is not ready to furnish the cash in exchange for them. The bank is bound by its agreement to keep the Government in funds up to a specified limit, but if it has not the means at its disposal and it does not choose to straiten its own resources to so large an extent, it can, we imagine, break the agreement, and refuse to advance a farthing. In that case, of course, the Government would be justified in raising wherever it could on any terms whatever. The bank would have to bear the expense of the transaction, including the difference between the amount of [interest and the amount which it would in the ordinary course have received under its agreement. The safest and most just course, in fact, that the Government could adopt if temporarily unable to meet its engagements, would be to state the fact publicly, and notify that no further vouchers would be paid until some arrangement had been made for supplementary revenue. This would be a humiliating admission it is true, but it would not be more humiliating than for a government of a country to have its cheques dishonored and creditors deluded. We must expect to put up with a good deal of humiliation in future if Mr. Ballance is to remain ranch longer in charge of the colonial finances, and we may as well begin at once to get accustomed to it.