South Canterbury Times, TUESDAY, JULY 12, 1881.

South Canterbury Times, Issue 2592, 12 July 1881, Page 2

South Canterbury Times, TUESDAY, JULY 12, 1881.

Within a trifle of a million and a half sterling leaves New Zealand annually as interest on the public debt. The sum is very large, indeed, in proportion to the population. There is a popular delusion in England that the national debt adds to the strength of the country. We have heard no one venture that opinion in regard to New Zealand. The indebtedness of the Mother Country does not diminish her wealth. The bondholders reside in the country, and in the process of paying the interest the money is transferred from the pockets of one Englishman to another. A similar and desirable order of things obtains in France and the United States. The three countries mentioned are far and away the richest on the face of the earth. Italy and Russia are in a different category. The outside creditors drain largely upon the resources of the people. The result is that Russia and Italy are chronically in a hard-up state. The utmost that can be said in favor of a State debt is that it strengthens the established order of a nation when the bonds are largely held by its citizens. But a country which is called upon to pay interest annually to outside creditors is subject to a process of depletion a constant drain upon its resources. New Zealand not only stands in that position, but is in the very front rank.

There is small prospect of wiping out the colonial debt for many generations to come. Indeed, there is every probability of the national obligations being increased. We are not yet at the end of the Public Works policy, which is a policy of borrowing. However, in the course of time, no doubt, there will be a gradual change in the creditor. As the colony progresses in wealth, the bonds will be transferred from Englishmen to New Zealanders. The sooner a start is made the better it will be for the interests of the colony. In the Financial Statement, Major Atkinson has brought the subject prominently forward. He stated that he would submit a proposal authorising the issue of a loan of £250,000, the principal and interest payable in New Zealand, The loan is to be issued at par, and is to bear interest at a rate not exceeding five per cent. Money at the present time is abundant for purposes of investment, and should a loan be issued at the maximum amount of interest, there is a reasonable hope that it will be taken up. There can be no better security than the State. We have heard it stated that money at present can be obtained on first class security at six per cent. A State loan issued at par at 5 per cent.

would compete favorably with private investors. There is a lot of trouble in connection with mortgages. It is true that in the first place the mortgagor has to pay all the expenses, but in few instances does the lender find it convenient to collect the interest. The matter is generally left in the hands of lawyers or finance agents, and we all know that these gentlemen do not give their services for nothing. The case would be entirely different where the State was the borrower. The bond itself would be almost as negotiable as a bank note, and the interest would be paid to the day without fail. A great advantage would be that the lender could realise at any time. As a temporary investment, Government bonds are unequalled ; and if the rate of interest is fixed at five per cent, no doubt many persons would invest in the securities as a permanent source of income, which would neither be affected by the fluctuations of the money market nor the rise and fall in the value of property. Already in the Australian Colonies Government loans have been locally floated, and the money has been obtained in Sydney and Melbourne at as cheap a rate as it could have been got in London. Some eight or nine years ago an attempt was made in New Zealand to place a colonial loan upon the local market, but it did not turn out a success. That was in the early days of the land mania, when people scouted the idea of only making four, five, or six per cent in monetary speculations. The times hare altered, and now money is readily obtainable at a modest figure. We sincerely trust that the proposed loan will be a success. As far as the mere purposes of borrowing are concerned, the requirements of the colony would be fully met by recourse to the London Stock Exchange. The great object to be attained is that the colony should live within its own resources. So long as we call in the aid of foreign capital, it will be a difficult matter to estimate the material progress of the country.