The Press Wednesday, July 8, 1925. The National Debt.

Press, Volume LXI, Issue 18428, 8 July 1925, Page 8

The Press Wednesday, July 8, 1925. The National Debt.

The report on the public debt which lms been prepared by Canterbury College in collaboration with the Chamber of Commerce—and of Avhicli we printed a full summary yesterday—is a very useful document. Headers of " The Press"' will perhaps not iind a great deal in it that lias not been emphasised often enough in our columns, but they will value it, as we do, for a reason beyond ,the fact that it. is a clear and sound statement of (he debt position and of the effects of vigorous borrowing. And" that reason is that it is xcry encouraging and wholesome to Jind public institutions like Canterbury College and the Chamber of Commerce helping in this way to get attention for public issues of very great importance. The essence of the report is in the following paragraph:"As a result of the overseas borrowing that lias been practised so constantly, the-Dominion i 3 enjoying now, as it has been enjoying for at least twenty years, a level of consumption which is far from justified by its current income. Wo are at present receiving annually, in the form of imports, more than live millions worth of goods in excess of what is warranted, in view of our interest obligations on State debt alone, by our curront production for export. Moreover, it is at least doubtful whether in all cases wo aro getting full value for the liabilities we are accumulating. The easy money that comes with unrestricted borrowing . is itself a stimulus to extravagant expenditure, and it is questionable whether all the money spent on public works, etc., in recent years, will prove as productive as was expected. The rapid growth of debt, together with the necessity to safeguard our national credit, arc, however, forcing upon us the necessity 1 for greater economy so as to reduce borrowing, especially from overseas." So long as the foreign investor believes that he is sure to receive his interest regularly and to be repaid his capital, we can always borrow abroad, almost as much aa we wish. But in order to pay the interest we must produce a great deal more wealth than we consume (for it is not in money, but in products ultimately, that we pay our foreign accounts), and the more we borrow the more we must provide for payment either through greater economy or greater production. The report prepared for tho Chamber of Commerce considers the means of reducintr the rate and volume of our borrowings abroad, and appears to suggest that salvation can most surely be looked for in " a reduction of Gov- " eminent expenditure." The compilers of the report do not clearly say so, but we assumo that they are referring to capital as well as administrative expenditure. For it is obvious from the tone of their references to the application of loan moneys that they will agree with the view we expressed on Friday last: — "So far as Now Zealand is concerned there is no need for anxiety as long as our borrowings increase primary production, and increase it within a reasonable time. Every pound borrowed that increases our output of butter or of wool is well borrowed; but everybody knows that millions of pounds have been raised in London for purposes which aro only remotely reproductive, and which in some cases have almost no bearing on production at all. In the case of this latest loan the prospectus sots down iive millions for. the construction of railways, purchase of rolling stock, extension of telegraphs, further development of electric power works, and so on, and two millions for advances to settlers and workers, and in a still young country those are all proper objects for loans if the pace , is not made too fast. But it is necessary to remind ourselves that the pace very often is set too fast in 6ome of those directions, and that it is distinctly dangerous to drift into tho easy belief that borroM'ing does not matter so long as it gives us assets to set off against our liabilities. There aro some assets that, may be of vory little use to us, and where borrowing merely adds to our comforts without adding vory soon to our productive rate it is placing a burden on us that we cannot afford to carry.'' The Chamber of Commeree and the Economics Department of Canterbury College intend later on to issue reports on the control of public expenditure and the growing indebtedness of local bodies. This will be a useful service indeed, and wc hope that the Chamber will also issue a report upon the extent to which the country, as a borrower, may safely anticipate the productive value of its capital expenditure. For Majority Rule. A controversy upon electoral systems has been going on in Wellington between Mr P. J. O'Regan, a vigorous defender of " Proportional Representar "tion," and Dr. W. A. Chappie, who was for some time a member of tho House of Representatives. Mr O'Regan's contribution to the discussion is not very interesting, being no 1 nioro than a repetition of the often j

refuted arguments used by the advo-1 cates of P.R., but Dr. Chappie makes I one sound and important point very i well, even, (hough he appears as an [ advocate of the " alternative'' vote as I a safeguard against a danger which is quite imaginary. Dr. Chappie has been absent from New Zealand for so long that it is hardly to be wondered at that he has not realised that those who complain of " minority rule " here are talking nonsense, as wc shall presently see. But on one point concerning P.P., a point upon which the soundness and practical value of a man's views do not depend on the time and place of his study, he writes with clearness and good sense. It is one of the cardinal articles of P.R. doctrine that the nation is lost if the composition of Parliament docs not correspond, at least to the first decimal place, to the political composition of the electorate. AVe have given many reasons for rejecting this theory of representation. .Dr. Chappie gives another. "Ju.-t as under-representation of the " minority is not necessarily an evil," he says—we ourselves have suggested that Labour would be better off if the Labour Party in the House numbered six men, all intelligent, than even 30 men of the kind it seems to prefer—- " so over-representation of the majority "is not an evil. On the contrary, it " may be essential to good govern- '" ment ; " —because the majority should be secure against the accidents of chance. A small majority, he adds, has as much right to rule as a large majority, and a large minority no greater right to obstruct or immobilise the work of government than a small one has; and " it i.-s one of. the dangers "of P.K. Ih.it, because it panders to "minorities and endeavours to enlarge " them, working majorities are often " not provided, and government is '' therefore hampered if not wholly in- " effective." Although for this amongst other reasons he. is opposed to P.R., Dr. Chappie is led by his fear of >( minority " rule" to advocate the alternative vote. If, he says, " the minority rules "while the majority has to submit to " that rule, democratic government bc- " comes a farce, popular resentment " prevails, and the seeds of revolution "find their most fertile soil. Minority " rule, therefore," he adds, " is the evil " we have to face and destro}- by olec- " toral reform." Everyone will admit that there, would be great peril to the peace and good conduct of a State if a minority were ruling and forcing a majority to submit to its decrees. But where, in modern times, under universal suffrage and the secret ballot, could such a situation arise? Wo might go further, and ask where, iu the same conditions of freedom, the majority in power could disregard and oppress the minority. Even if the number of electors voting for a Government's candidates is less than the number of those voting for the candidates of other Parties, id is not necessarily true —and must generally be untrue—that a minority is ruling a majority. For the great bulk of the Government's acts—of legislation and administration —may be, and, as New Zealand's experience bears witness, usually are, one by one, such as a real majority approves. And the reason for this apparent anomaly is that the " majority " is rarely—and it is certainly not in New Zealand—a homogeneous body representing the opposite of what the supposed "minority" represents on the Treasury benches. The talk of a " disfranchised majority " has no real relation to the facts of the case. Minority rule —in the sense of rule by the minority interests in the teeth of a solid and fundamentally hostile majority opinion—is normally impossible with a democratic franchise. It is possible, we believe, in only one set of circumstances—that is to say, when, through causes which have nothing.to do with political principles, the majority is so divided in needless conflict that a real minority, standing for interests opposed to the interests of the divided majority, obtains control of Parliament. Against this most undesirable event the natural and the only effective and healthy safeguard is, not an artificial complication of ballot-box procedure, but a purging away of the unwholesome and irrational humours that obstruct unity within the majority.