GOVERNMENT FINANCING.

Patea Mail, Volume V, Issue 427, 21 May 1879, Page 2

GOVERNMENT FINANCING.

A Press Agency telegram dated Timani, 14th May, says :—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 anyone else. In an able article on the present financial crisis,'if says : The straitened circumstances of the Government is due to the childish miscalculations of the Treasurer in making his Estimates, ,and 1 the extravagant manner in which affairs have been conducted, but there 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 th at from one cause and 1 another the Colonial Treasurer has abstained from issuing deficiency bills, and we 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 amomit 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 needd,, 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, jit, is a happy-go-lucky. Micawber like style Of financing. Certainly if things are as we have hypothetically described I them, perhaps it is the best that can be i adopted. Another possible solution is that the Colonial Treasurer is ready to ; issue deficiency bills, 1 but the bank is not ready to, furnish the cash in exchange !forV.them. ; - The bank, is bound by Lite, : agreement; to keep the Government in funds up to a specified limit,- hut if it j 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 wonld be justified in raising wherever it could, on any terms whatever. The bank would have, to bear the expanse 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 aiid most just course, in tact, that tlie Government could adopt if temporarily unable to meet its engagements, wonld 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 Ballaiice is to remain much longer in charge o£ the colonial finances, and we may as well begin at once to get accustomed to it.