THE Wairarapa Age MORNING DAILY. WEDNESDAY, MAY 20, 1908. THE EFFECT OF INTERNAL BORROWING.

Wairarapa Age, Volume XXXI, Issue 9093, 20 May 1908, Page 4

THE Wairarapa Age MORNING DAILY. WEDNESDAY, MAY 20, 1908. THE EFFECT OF INTERNAL BORROWING.

It may be taken for granted that , when the Government, realising the resourcefulness of the country,decided I upon a policy of internal borrowing that they never dreamed but that a short period would lapse before they would be charged with creating a I scarcity in money; and, in fact, bringing about a state of temporary depression. The accusation, however, appears fairly true, and it is one over which the Premier, should ponder most earnestly. The principle of borrowing within the country is, no doubt, a good one, but clearly it is a policy that may be carried too far. 'L'he state is not an institution apart from the people —it is the people—and a course of action that may tend to affect general prosperity requires j to be pursued very warily. The "New (Zealand Herald," in a recent artj icle, remarks Whatever maybe said upon the general question of borrowing for public purposes within the dominion there can be little difference of opinion as to what should be j dons when money is locally hard to I obtain. When money is plentiful

little harm can be done by thfi Government and local bodies drawing upon local resources for public .requirements, and it may fairly be maintained that by so doing we may gradually become financially independent of foreign accommodation. But when the available supply of money is less than the local demand for private enterprise, it is obviously bad for the entire community that Government and local authorities should enter into competition with private borrowers. For by so doing they not only unduly raise local money rates, but in many cases prevent money being obtainable upon perfectly good security. Private borrowers cannot take advantage of outside money markets; while Governments and wealthy local authorities can do so without any difficulty and upon advantageous terms. Public policy, therefore, should induce public borrowers to withdraw from the local market when money is locally "tight," and only to come into it when they can do so without interfering with private enterprises. For it is to the immediate interest of every member of the State, employer and employed, man, woman, and child, that money should be available at reasonable rates to all who wish to develop reproductive work and who have the necessary security to offer. Any undue difficulty in legitimate borrowing checks industrial activity and must react upon the prosperity of the commun- ' ity."