TREASURY BILLS.

Dominion, Volume 2, Issue 510, 18 May 1909, Page 4

TREASURY BILLS.

i A mystiftino item in the accounts of the Dominion is that which,comes under, the heading Treasury Bills. Simply put, Treasury ■Billß are used by the Govern-ment-when cash is short, and are issued in anticipation of, revenue.. That is to Bay, the Government may have a large amount of revenue coming due two months ahead, but may be short of'cash, for the requirements of the immediate present, and therefore borrow by means of Treasury Bills against the revenue in prospect. It is merely a form of temporary accommodation. .Unfortunately Governments are inclined to take advantage of the general ignorance which prevails concerning, these transactions.' When the amount of Treasury. Bills issued shows an increase, the it is of no consequence.as it is merfly anticipating revenue. When, however, the amount is reduced the Government takes, credit for having'reduced the indebtedness of the country. ■' ■ In a useful little article the Otago -Daily. Times . draws attention to the misleading character of the Prime Minister's ; recent claim at Invercargill for the credit of having reduced , the amount of Treasury Bills outstanding. When'the, Ward Government took office tho amount of outstanding Treasury Bills was £700,000. \ The: figure at which they stood on March. 31 last was £250,0q0. On the basis of this fact the Prime 'Ministee asked his Invercargill audience to believe that "our public indebtedness, in three years, has been reduced by the large sum of, £450,000." In his epeech in Christchurch last week he included this amount with the £282,443 which has been set'aside as sinking fund for the extinguishment of loans. The Prime Minister, that is to say,' desires the public to believe that his operations'in connection with the' Treasury Bills have reduced the public debt by £450,000. That, as' explained above, is an entirely incorrect reading of the position. The Treasury Bills are merely Bills, of short currency, temporary borrowings in anticipation of revenue. Transactions in them are merely cash-box transactions, as is indeed evident from the form in which the balancesheet of the Consolidated Fund is printed. The Treasury Bills are included with tho cash. To give the amount of either tho opening or ending balance,' the amount of outstanding Bills is deducted from.the cash and advances in the hands of the i Government. ■ < .-

The fact is, of course, that these Bills, being issued in anticipation of revenue,, should be discharged as the revenue comes in. Since interest must be, paid upon them, it is all to the Pkime Minister's credit that ho has paid off £450,000. But when it'is remembered that the £700,000 worth of Bills borrowed in anticipation of rovenue, have ouly been reduced by iElMyuw a ynut in spibi of tint. ijttcroJuta

in the revenue since the data on which the Bills were issued, it must be admitted that the Government has been very slow in redeeming these borrowings. There is also this to bo said, that it is as easy to Issue new Treasury Bills as to pay off old ones. "When, in November last, we noted that the Government had issued £200,000 worth of new Bills, making the total £600,000, the Prime Minister replied: "This is in anticipation of revenue, and is quite justified from the fact that at the end of November' about half a ! million comes in from land taxes alone, and those Treasury Bills will be paid off again next month. That course was adopted by me for the reason that I wanted at present to utilise the ordinary revenue of the country for tho various purposes of the Government without in any way drawing upon our bankers." This will make it clear that the Government regards the issue of Treasury Bills as only a bookkeeping convenience) to be resorted to at any time. Sir Joseph Ward entirely repudiated tho idea, it ■will be seen, that he had increased the public indebtedness by issuing tho £200,000 of new Bills in the September quarter. How, therefore, can he expect the discharge of such Bills to be regarded as a reduction of the public, indebtedness! If tho issue of these Bills does not increaso the public debt, then the discharge of them does not decrease it. It -wia in these circumstances anything but candid on the Prime Minister's part to endeavour to create the impression that he has reduced "the public indebtedness" by £450,000. ;:/...