The Press. WEDNESDAY, JUDY 8, 1914.

Press, Volume L, Issue 15014, 8 July 1914, Page 8

The Press. WEDNESDAY, JUDY 8, 1914.

Borrowing and Railways.

It' seems to us that there is a good '■■■leal of sound common sense in tho adiress on railway- construction delivered by Mr W. D. Hunt, of Invercargill, one of tho members of the Public Service Commission, which was published in our issue of yesterday. The system of State construction of railways -which has been pursued in this country, is a. shocking illustration of tho abject muddling which characterises most.State undertakings. In the first place, as we have of ton pointed eat, a Government simply daro not take one main line in hand and finish it before undertaking less important branch lines. Tho Korth. Island Main Trunk line was twenty-one years in construction, eating its head off, in interest, and producing little revenue, until the two sections were joined up. During' that time millions of pounds were spent in pottering away at little uncompleted sections all over the country, much of this expenditure also being comparatively futile. Mr Hunt States; that during the twenty-threo years he has been in Southland railways have been constructed at tho rate of two and a half miles a year. This rate, he cays, on a population basis, represented the district's fair share. But if railways are required anywhere, is it not obviously absurd to dawdlo over

them at tho rate of two and a half miles a year? If they are going to bo rcvonuo-prodticing, they should be constructed at an expeditious rate, so that the revenue may bo available as soon as possible. If they are not going to yield a fair return, they should not bo undortaken at all. Mr Hunt aptly cited the case of Canada. Supposing tbo railways there had boon constructed by the State, and, for political reasons, odds and ends of railway construction had been started all over tho great Dominion. how long; would it have taken to construct the Canadian-Paci-fic Railway, some 3000 miles in length, from tho East to tho West Coast? Does any sano person imagino that it would ever ha.vo been completed at all? Another example to show with how little wittlom we havo been governed in the matter of railway construction was briefly referred to by Mr Hunt. Jn Canada the greater part of the railways havo been constructed by private companies to whom the Government granted alternate blocks of land along tho lino of route, the other Moots being retained by tho State. As the railway was constructed this land was put on the market, with the result that not only the companies but the State benefited directly from tho increased value given to the land by tho railway. In New Zealand the usual practice has boon first to make a railway with money borrowed by tho State, and then, if land was required for settlement purposes along tho route, to buy it from the private owners at the enhanced value given to the land by tho construction of tho railway. Could a more unbusinesslike proceeding ever bo conceived outside of a mental hospital? Mr Hunt very truly points out that if Iho Government had taken a strip of land along the route of the North Island Main Trunk β-ailway—and it could havo been done without injustice to tho natives—the whole expense of building tho railway would havo been recouped by tho subsequent «>lo of the land, and it would have cost the country nothing. As to the future, Mr Hunt suggests that before constructing a railway the Government shquld acquire, under tho Lands for Settlement Act, some at least of tho land proposed to ho benefited. Hβ also urges that districts which want railways should undertake to rate themselves to mako up any deficiency of tho earnings of the line if a deficiency occurred. With both of these suggestions wo agree. "When, howovcr, Mr Hunt goes on to nrgo that New Zealand is not borrowing enough for railway construction, and J should increase the amount, we .part company with him. IMr Hunt again cites the case of Canada. Hβ estimates that, during tbo seven years from 190G to 1913, the aggregate amount of capital introduced into Canada was £500,000,000. In New Zealand, he adds, there was practically no large borrowing apart from the. State, and in. the course of the seven years mentioned New Zealand had borrowed £13,000,000, or £13 per head of tho population, as compared with Canada's £80. But thero is an immense difference between State borrowing and tho investment of private capital. Canada's national debt is very light, and most of this capital referred to by Mr Hunt has beenjntroduced by public companies and private investors. In tho latter case, if tho money is badly spent only those who provide the money suffer. In the case of State bori rowing, the loans, both as to principal and interest, are a continuing burden on the thrifty and industrious inhabitants of tho country. Already both debt and'interest in New Zealand aro increasing at a faster rate than the population, so that the ' amount per head shows a constant rise. Again, if the amount of borrowing were in-creased,-so far from greater wisdom being shown in the expenditure, wo fear tho reverse would bo the case. The scramble for tho loaves and fishes in all the districts would be fiercer than ever. Lastly, there is tho question of our credit in tho London market to bo considered. With the constant demands to meet obligations falling due and such new works as aro absolutely necessary, we have already strained our credit as far as wo dare. Unhappily, it is impossible to retrieve altogether the errors of the past. The present Government, we believe, will do what they can in this direction. Wo hopo also they will do -what they can to encourage the inflow of private capital from overseas. Unfortunately, th.-3 also is no easy task. Most of our policy in tho past twenty yeare has been in the direction of discouraging such investment, and it has been attended with fatal success.