The Temuka Leader SATURDAY, DECEMBER 31, 1887. THE LOAN.

Temuka Leader, Issue 1680, 31 December 1887, Page 2

The Temuka Leader SATURDAY, DECEMBER 31, 1887. THE LOAN.

Thb fertile brain of the leader of the Young New Zealand Party—Mr James Mills, M.H.E. for Port Chalmerß, and, manager of the Union Steamship Company—has conceived an idea. In a speech he recently delivered in Parliament he said that it would be as cheap for the Government to borrow money in the colony at 5£ per cent, as to get it in England at 4 per cent. It is in the reason which he gave for coming to this conclusion that his wonderful sagacity, intelligence, and clear-sightedness is betrayed. He urged that the expenses of raising the loan in England would be equal to 1 per cent., thus making the English loan 5 per cent.; and that if the money were borrowed in New Zealand the, bondholders would have to pay properly tax, which would be equal to i per cent. Thus for money borrowed in England at 4 per cent we should have to pay in reality 5 per cent., while if we borrowed it in New Zealand for 5£ per cent, it would come to the same thing, because the New Zealand lenders would have to pay the £ per cent, extra back to the Government in the shape of . property tax. ••* ;.This m : really a brilliant idea. Its only drawbati&iis thM if:wVgained it in one way wa would lose it in another way. It is necessary to make ..matters very simple to enable members of the present Parliament to understand them, and consequently we will try to illustrate this in a manner that will be comprehensible to Mr Mills and hii party. Supposing Mr Mills hao at present £IOOO in the Bank on fixed deposit, does he not pay property tax on it? Of course he does. Now, supposing" that the Government adopted Mr Mills's suggestion and raised "the loan at 5£ per cent, in this colony, and Mr Mills invested his £IOOO in bonds, would he pay the property tax twice ? Would he pay property tax on the £IOOO he had in the Bank and also on the £IOOO he had invested in Government bonds ? He certainly would not; so the Government would gain nothing by the property tax payable on the bonds, for had tbe bonds never been issued they would get the property tax all the same.

Mr Mills was like the man whose* " conduct was right and his argument wrong." He evidently has some hazy notions of the thing, but cannot see clearly through the thickening gloom in which the exertion of thinking out this problem has enshrouded his mental faculties. He is certainly right in saying that the Government ought to offer for sale some of their debentures in this colony, but we do not think that it would he necessary to give 5| per cent, interest. The banks are now giving only from 2| to 4i per cent, interest on fixed deposits, and consequently those who have money deposited with the Banks are very much dissatisfied because they are not getting more. The result is that there is an unusual amount of money seeking investment in this colony at the present time, and we firmly believe that if the Government attempted to raise a loan of half a million at 5 per cent, in New Zealand they would not have the , slightest j difficulty in getting it. The rate of interest is better than thebanks give ; the security is better, and there is no reason whatsover why the loan should not float here. The advantage of raising the loan in the colony would be that the money payable as interest would be kept amongst ourselves. To illustrate this, let us suppose again that Mr Mills invested his £IOOO in Government bonds at 5 per crat., he would receive £SO a year Jn interest from the Government for it. This £SO would remain in the colony, and Mr Mills would do something with it. If he had no other use for it he would deposit it in the bank, or leud it on mortgage, and thuja the amount

of money within the colony would be increased. If the £500,000 referred to were borrowed in this colony, the result would be that £25,000 a year would be kept here, and that would tend to cheapen money and promote industrial development and prosperity. But the Government has decided to borrow in England, and this £25,000 will go away annually. This must, of course, make the colony poorer and poorer. But the present Government is particularly devoted to the interests of the banks, and probably the floating of a loan in the colony might not suit them. Before the people could take up the debentures they would have to withdraw their deposits from the banks, and that doubtless would make things awkward for these institutions. All Government action tends to put money into the purses of the banks and money-rings, and this probably is the key to the whole aecret.

THE UNEMPLOYED. In a recent article the Otago Daily Times suggested that instead of paying the unemployed for doing useless work they should be provided with proper tools and placed under the guidance of skilled miners on the goldfields, where, if they could not make a fortune, they could make, at any rate, sufficient to keep them. The suggestion is certainly one which ought not to be despised, although we do not think it would prove so successful as some people think. At the best of times there have been at work on the diggings people who have not been able to make even a living and without doubt if the unemployed were turned loose in large numbers in places where gold is supposed to be obtainable some of them would get gold while others would not. Gold is not to be dug up wherever one sinks a hole. One man may hit on a patch of gold, while another a few yards away might be working for years without seeing the color of it. Then what would become of the unlucky ones ? Who would pay their bills ? If the scheme is to be carried out some provision must be made for those who are not fortunate in selecting the gold-yielding places. They 1 cannot live on air.

The amusing part of the whole ■cheme, however, is that in which it it suggested that the gold should be converted into sovereigns by the , Government, so that wo may not henceforward go begging to' England for a loan. J hose who entertain such ideas must know very little of our needs. We do, of course, convert the gold that is dug out of the ground into sovereigns, just as we convert our wool and grain, etc., into money. We export the gold to England,, and there get coined gold for it—and with this coined gold we pay our interest, on the money we have borrowed. -\ We do not want the .gold in this country. If we coined it here We should have to send it straight away to England to pay interest on our borrowed capital, and consequently all we would gain by coining it is the I increased .value. Which- the process f would give it. fit is very doubtful whether this would' be sufficient to pay the expenses which the coining of it would involve; in fact, we do not think it would, and consequently tbe suggestion of coining our own money [ is the result of great ignorance of our position!, Apart from this, the suggestion to put the .unemployed to work on goldfields is well worthy of consideration, provided that men who fail in getting gold shall be looked after. If some pronsion of this kind were not made, some would do well while others would starve.