THE SINKING FUND.

Auckland Star, Volume XXXII, Issue 90, 17 April 1901, Page 2

THE SINKING FUND.

(To the Editor.)

Sir,—As some of your readers may, like myself, have but a hazy idea of what the term "sinking fund" means, I take the liberty of publishing, by your kindness, a few extracts from authorities.

"Chambers' Encyclopaedia" of 1892 defines it as a fund formed by setting aside income every year to accumulate- at interest for the purpose of paying off debt. After referring to early forms of sinking funds and mistaken Ideas regarding them, the article, says:—"lt is said it is unjust to the present generation to impose a burden upon lt simply for the benefit of future and probably more wealthy generations; but It may be rejoined that we must consider the continuity of national life and to remember that the present race is supposed to enjoy the benefits of former sacrifices."

The foregoing should be a conclusive reply to Henry Copeland, Agent-General of New South Wales. In the weekly edition of the London "Times" dated November 23, 1900, ls a letter from him in reply to mine on 10th. I extract the following from It:—"Is this generation to tax itself so that future generations may have free railways and trams, free telegrams, and water and sewage, while we the pioneers have to pay fares and rates? I Bay without hesitation a young country is Justified in borrowing so long as the money ls judiciously expended In developing its resources and you do not borrow beyond your means of paying interest without stress. There is a real virtue in a reasonable public debt, for you are always secure of the sympathy and the support of your creditors—[l have heard the same argument used in favour of a big bank overdraft. The sympathy and support of creditors did not help Spain, Turkey, etc., out of the mire.—W.S.A.j—and if we leave that Indebtedness for future generations to deal with, do we not leave them also an immensely improved estate with an ever-increasing population, with which to divide the indebtedness?" That is simply evading the question. It is no reply to toy argument, which ran thus:—"But tlie colonies are building up a heavy handicap for the future; £1,770,000 goes; away annually in interest from New Zealand never to return, and yet we owe the £48,000,000 capital. Nothing is pht in tho stocking towards settling day. Conld anything te more rotten? And we could as eabily work upon sound Tines,, just aa persons buying their bouses payable by Instalments obtain terms which enable them to pay off all in time, at little more, perhaps, less, than.current rent would be. We are told borrowing la tor, reproductive works. My reply is crushing and unanswerable. They are neither reproductive nor worth', doing if they will not bear a 40 of 50 years' sinking fund. I would ask your reader* to put to themselves this question; How much benefit will future generations derive from these items of. New Zetfund's debt?— , Immigration £2.500,000 Maori War , 2,300,000 Defence -1.800,000 Ooldfields and Coal-mines .. '721,000 Loans to Local Bodies 1,200,000 Advances to Settlers .2,000,000 [Settlers are allowed 30 years as their • Sinking Fund.—W.S. A. 1 . Ceflclencies lh Revenbe„.. 1,900,000 Provincial Liabilities ...... 788,000 Charges and Expenses Raising Loans ....:, 1,600,000 Bat even our most permanent works are not worth a century's purchase. The march of science is so rupld there is no guarantee railways will be any more in 'vogue 100 years hence than stage coaches are now. Take up the latest "Engineer'Mn the Public Library, and you will find sometning about, an electric railway capable of 120 miles an hour from Berlin to (I think) Hamburg. , And so on, along the. gamut. ' Public w.orks and buildings, £3,700,000; land pur* chase, £3,500,000; telegraphs. £800,000. purely most of these will outgrow their use fulness within 50 years, which would be an ample period for self-extinguishment Lpon this subject,! wrote:—"One often hears, 'Let posterity bear its share of the burden ' Sir Ju ins Vogel's public works policy has been in operation 30 'years; but as I have shown, there Is no provision ror repayment. That is what this generation has done towards Its share. Let succeeding generations run upon the same lines and there-, will be a splendid public debt such as would gladden the heart of a friend Who remarked to. me lately: "The colony would not be worth a (adjective^nouri) without a good public-debt.' But if my friend m£h^ nIJ + l Ive a few gyrations on he might nnd these, beautiful debts exceedingly Inconvenient in times of stress, and a handicap in trade competition." Mr \V. P. Beeves, Agent-General. Is a ve, r7 ?£ vef man ' especially at making himself ridiculous. In the "Times" of November 23 he gives the following definition of a sinking fund .--"This Is the security the English lenders have—a prosperous, Intelligent, expanding young nation, the wealth, honesty, and energy of which form, in truth, the safest possible of sinking funds." That is an excellent argument for paying off the debt, becapse it ls testimony to our ability to do so; but it is not paying off the debt, and therefore, according to the "Encyclopaedia," has none of the characteristicsyof a sinking fund. In fact, Mr ReeveS is pleading for the continuance of the present non-liquidation system which I so ; strenuously condemned.

1 The MEn,cyclopaed.la."i continues :-*"The less the previous debt so much greater would be the power of a State In making a loan in case of exceptional need." "It should also be noticed that *an old tax is no tax,' and that in a period of prosperity it is not advisable to lessen or abolish^taxes which .must afterwards be re--Impbsefl."

Kef erring to the British National Debt there is the following:—"ln 1888 there was carried out an important .conv.__rsloll.-the new stock issued to bear'St per cent, till 1908, and thereafter 2i per cent"

The '^Statesman's Year Book," referring

BBBSSSSBSi ' Eagggggggji', to the British debt, says: "Since 1817 th« capital of the debt has been steadily aecreasing, excepting for the years of tU* Russian War. Tbe annual charge is now. less than at the close of that war by. £3,550,000. Moreover, the present figure,' £25,000,000, includes a large provision foe repayment of the debt amounting in 189?. 98 to £7,360,000." At tbe termination of the Crimean War (say 1857) the debt was £837,000,000, and the annual charge £28,800,000. Decrease: since the Crimean War, 202 millions, and*: lv annual charges £3,800,000. Debt befor« Boer War was abo"ut £630,000,000.-1 am,

Wm. S. AICKIN.