BORROWING.

Press, Volume III, Issue 95, 27 December 1862, Page 1

BORROWING.

The one single act which will preserve tbe memory of the late session of the Provincial Council from oblivion, is the Loan Bill; whether its memory will on that account be respected or reviled, depends somewhat on the chapter of accidents, somewhat on the wisdom and prudence of those who are entrusted with carrying the law into force. The present Superintendent is a politician surely to be envied. r > / Tiches are like greatness, which some mon some haye it thrust upon them. Mr.^loorhou^i s i 0 the latter predicament. He has jw£en to this prince the very embodiment of the idea /ofborrowing. Vhat has been • is avowed policy: that ; is the impulse\hich he has given to Canterbury. _ Borrow all youban--use your credit to the utmost. ; Those are his avd e d maxims of public policy. One i would imagine thlhis Honor had guaged the capacity

of the lender to its lowest t_epth, and that he had given his confirmed judgment of what Canterbury could (to md ought to do, when he advised that we should borrow £500,000, and pay off the Railway Loan \ in other words, that we should borrow £250,000, besides the money wanted for the railway. That was tho Superintendent's view of what wa3 wanted by the province, and what the province could reasonably afford to do in the borrowing line. We do not speak of tho other members of the Government in this matter, because no one could listen to the explanations made in the Council, without feeling that tho gentlemen conducting the Government business either had not been entrusted with tho com- ' plete views of the author of the soheme, or had failed to master the ideas they involved. This was not the only discrepancy observable between the Superin. teudent and his Executive; for the Superintendent in his speeches and messages recommended the Council to make provision for certain works, whilst tho Executive to tho last neglected to bring the considcratiou of such works before the Council at all. In this question of borrowing the members of tho Executive were as usual pooh-poohed by tho Council. They were simply treated as if they had no existence. The Council, following the lead of an independent member—we mean a member independent of ihe Government— voted the Superintendent a loan of _j'250,000 more than he ever asked for —more than, \ we presume, he thought the province required. The pupils had bettered their masters instruction. The for borrowing had hold on the Counpijj . and they actually borrow, it would seem, for the sake of borrowing. We say, for the sake of borrowing. Is it not the ordinary and natural process,to settle first what work has to be done, then to ascertain how much it will cost, and lastly to consider how tho funds are to be procured to pay for it ? That is the ordinary businesslike mode of going about a matter of this kind. But the reverse was the course adopted by the Provincial Council. A number of works were talked of as necessary ; bridges over the great rivers; extension of railways, and so on. But there was no estimate of cost, not one shred of information as to how or when they could be made or what, capital was required; or what return was to be expected. The Superintendent says generally in a loose sort of way, "Let us borrow £250,000." "Make it £500,000 " says one member, and tho rest throw up • their caps, and the thing is done. No man can call this rational or business-like. No man can have real i confidence in a government conducted with suoh utter ( disregard to all maxims of financial prudence It is folly . to suppose that a Government can be conducted on ; other commercial principles than those which guide j private individuals and firms. And we ask any merr chant or tradesman or banker in tbe place what would 2 they think of that man who proceeded to borrow in this reckless manner wholly irrespective of the objects for which he wanted the money.

The question of whether tho provinoe wanted this half million—whether the requisite works could have been done without it—this, has not yet even been argued in the Council. It is not yet even settled what works are to be done at all. There oan be but one result to finance of this description; —waste and extravagance. Ligbfc come light go. The reckless indifference of the Council as as to borrowing will be far surpassed by the reckless waste of the Government in spending. It is sure to be so. But the mode in which the loan was £rst treated by the Government was an additional evidence of tho manner in which it was intended to waste it. -%t was brought to account in the Estimates simply as supplementing the ordinary expenditure. , Now just see wlwtA the result would have been. Every one knows tbaM every member in the Council has his peculiar votfcStflf'

get, and that, under the successive additions made to the Estimates, they mount up at last to a sum which is only limited by tbe estimated revenue ; aud not always by that. If a revenue of .6150,000 is expected to be received, that and more will surely be voted, whether it can be spent or not. But what will be the case if there be an indefinite reserve in the shape of an unraised loan ? A power of always borrowing and adding to the revenues to meet any expenditure, however large, which may be voted ? Is it not clear that the fall rein would be given to extravagance, and that money would be voted and squandered without limit. Tbe stand made by the opposition in the Council was not without good effect. Tbe principle was asserted that the loan when raised should not be treated as ordinary revenue, and brought to account to meet ordinary expenditure. It was resolved that all money taken out of tbe loan should be so taken only upon specific vote of the Council, and the Council would not vote money out of the loan except for works of such magnitude that they could not be done out of ordinary revenue. The Appropriation Bill, therefore, specially appropriates money raised under the Loan Bill to certain public works. This is an immense victory over tho financial foolishness of the Government, because we shall now at all events know exactly what will have become of the money borrowed. Mr. FitzGerald tried to obtain the recognition of a still further principle; but the Council did not appear to understand fully its importance. It was, that the works to which the borrowed money should be applied should be, strictly speaking, remunerative works. But it was argued by some members, that, so loug as the works were generally useful and enriched the country, it was of no importance whether they were remunerative or not iti the technical sense. The 'Lyttelton Times' took up the same side and argued in the same loose and inconsequent manner. A remunerative work is one out of which, when complete, an income is created which pays the annual interest on the capital sunk in constructing such work. If money is borrowed for such a work on the security of the Land Fund, we have in after years the advantage of the work, and wo have the Land Fund to spend as well. " Now suppose the borrowed money be expended in an ordinary road or bridge on which no tolls are collected. The Land Fund to that extent, instead of being available for current works and undertakings, is eaten up in paying the interest on the debt incurred. But, say the objectors, if a road be improved so that a ton can be carted on it instead of half a ton, has not the,country tho benefit of the labor saved ? True, it has. If the farmer saves one day's labor in the week for man, cart, and horse, no doubt there is a clear gain to the country of, say, 80s. a week. But who gets that saving? Not the Government but the farmer. If the farmer were taxed to pay the interest on the debt it would be quite another thing. But we are not considering that case. Practically he is not taxed. The distinction between the loans in the two cases is simply this. In both cases the Government has to pay the interest; in both cases a fair return is created by the mode in which the borrowed money is invested; but in the one case, such as in a railway for example, that return is applicable to dischaige the interest on the debt; in the other case that return goes into the pockets of private individuals, and the Government has to find the interest out of other funda. Immigration may or may not be a remunerative work in the sense in whioh we now use the term. The cost of introducing an immigrant is ultimately about .65 a head; the interest on which at seven per cent, is seven shillings a year. Does the immigrant produce this revenue to the Government, clear of all charges ? It is true that he pays to the Provincial chest about 20s. of customs duties, but on the other hand he costs more than 20s. to govern. The expenses of Government have increased as rapidly as population, if not mors so. The ordinary cost of Government is now greater that the ordinary income. It is doubtful whether, under the present system of Government, tbe immigrant does pay a net revenue of seven shillings to the Government available for the interest on theoapital sunk in introducing him. This part of the subject, however, _vould require more discussion before a reliable and satisfactory result could be arrived at. A country maty be in such a state of temporary - depression that it may be wise and right to borrow

money even for the ordinary expenses of Government. Credit is the great machine for equalising the burden of bad times with those of prosperous days. It is the revelation to modern society of the mode in which to protect the fat kine from the voracity of the lean. Credit may be used, but it may be abused; and we cannot call it other than a gross abuse of credit, to borrow money without any specific object on which to expend it, and that at a time when the annual public income is such that it is almost impossible to spend it without deranging the whole commercial machinery of the country, and seriously crippling all the operations of private capital.