CITY COUNCIL FINANCE.

Auckland Star, Volume LXIV, Issue 242, 13 October 1933, Page 6

CITY COUNCIL FINANCE.

The difficulty being experienced by the Auckland City Council in getting money to finance permanent capital work without "paying a. tax considered by the Loans Board to be too high, should draw attention to other methods of financing public works. The Loans Board having approved of the purpose of the expenditure, in effect having certified that the money required should be spent, it would be profitable to the State to create the money and lend it to the City Council at even go low an interest as one per cent for a period equal to the estimated duration of the assets to be brought into existence. The public creation of money for public works is no wildcat scheme of finance, nor is it inflation. Money for private purposes is amply catered for by the overdraft system and can be safely left to private enterprise, but money for public works can be best provided by the State by a necessary addition to the permanent currency of the community, not as a loan, but as'an exercise of the sovereign prerogative to issue public money. It may be -safely predicted that much of the overwhelming public debts of British communities-will be gradually reduced, not by deflationary and industry-destroying taxation, but by wisely-planned creations of public money to pay public debts, and that all public works, in the not-far-dis-tant future, will be financed by the State, not as loans, but by public creations of money, regulated by financial experts, and permitted to remain in circulation as permanent money as lon<» as the welfare of. the community should require it. As Dr. Walter Leaf pointed out in his manual "Banking" (1926), the British depression was precipitated by the British budgetary surpluses of 1920-23,- whereby the British Government was enabled to repay £500,000,000 of the nation's floating debt, to the accompaniment of falling values, bankruptcies aud an increase of over a million in unemployment. Repayment of public debt can result onlv in national disaster when it means the cancellation of money before goods and debts have themselves been consumed and discharged. W. J. GATENBY.