MONEY FOR PUBLIC WORKS.

Taranaki Daily News, 8 August 1919, Page 3

MONEY FOR PUBLIC WORKS.

MAJOR HIKE'S SCHEME. In liia address to his constituents at the Town Hall, Stratford, 011 Wednesday evening, Major liine, M.P., proposed a scheme for carrying out public works by means of terminal bonds. "To carry out ft progressive public workß policy," snid MtijoP Hine, ''many millions of money will be required. Are we going to carry on the old expensive system of borrowing, and piling up our public debt, or shall we adopt another way? In the past our methods have been to borrow, borrow, borrow, persistently and consistently, generally outside 'the Dominion, but judging from the high rates of interest that will be ruling in England and elsewhere, this practice will have to cease. I have given much thought to this vital question and after all my study of the position, I have eomo to the conclusion that a system of issuing public works terminable bonds in a limited number is not only sound, but will be a profitable investment for the Dominion Before enlarging on the proposal, let us closely examine how the present system ivorks. We borrow, say, for illustration, ten millions at 4 per cent., repayablo in twenty-five years. By the time the twenty-five years have elapsed we have paid in interest alone £10,000,000, and still owe to the money-lender the original amount of ten millions that we borrowed. This really means, that for the ten milllions worth of work done in this country, we have paid away in interest and repayment of loan combined a sum of no less than twenty million pounds, or to put it into practical words, we have only received 10s worth of work for every pound paid to the money-lender. Now, mv proposal is this: That instead of borrowing for public works, the Government issue Public Works Terminable Bonds (of various denominations), the bonds to be a legal tender in the Dominion, and in the Dominion only. May I divert for a moment to enlarge ou the question of paper money being a legal tender During the ftvkolo period of the war the banks doing business in New Zealand have all enjoyed the privilege of their bank-note., being legal tender, and this privilege is to continue until December 31, 1922, -s:i that the question of paper money being accepted as legal tender is not altogether a new thing. Now to go back to my proposal for the issue of terminable bonds as a legal tender. A strong Redemption Fund should be instituted which will be sufficient to redeem the whole issue within the period the bonds are issued for. In fact, my proposal is that a percentage shall be redeemed each yea'' | of currency. For comparison with the present system of borrowing, the effect of which I have just- tried to explain, with the proposal I am advocating we will take the issue of ten million pounds worth of Public Works Terminable Bords. These bonds would be used for the purpose of paying for public worlM, and instead of carrying any interest, o per cent, would be set aside as a Redemption Fund, and a half-a-million bond-i would be redeemed each year, with the result that at the end of twenty years the ten millipn pounds worth of Public. Works Bonds will have been redeemed, and the country would have ten millions worth of public works free of any debt ), and will have been built out of our ordinary revenue, under the method's I am proposing, whereas if we continue in the old way of borrowing we shall have paid ten million pounds in iutercsL. and still owe the money-lenders ten million pounds. To successfully carry out this proposal the cordial co-operation of the banks of this country would be necessary, and I feel sure their assistance would be forthcoming, especially recognising the protection the state has given the banks during the whole period of th. 1 war and for the next three years as well. The effect of issuing bonds as a legal tender would probably mean a withdrawal of bank notes, so that arrangements would require to be made with the banks, under which arrangement the banks would undertake to treat the Public Works Bonds as their own notes if re-issued by them in the ordinary course of business, in so far as bank-note tax and gold reserve is concerned.