The Dominion. SATURDAY, APRIL 30, 1910. AN ADVOCATE OF BORROWING

Dominion, Volume 3, Issue 805, 30 April 1910, Page 4

The Dominion. SATURDAY, APRIL 30, 1910. AN ADVOCATE OF BORROWING

What a Southern contemporary calls "an important speech" was delivered by the Hon. T. Mackenzie at Dargaville on Monday last. The newspaper reports of this utterance contain nothing that-can be said to make "important'' what is sufficiently described as an ordinary Ministerial speech. It does contain, however, some references to the public debt and the borrowing policy which are worth;a little notice, partly for thou- own sakes, and partly for the indication contained m them that, the Government intends, if not to intensify, yet at any : rate, fully to maintain, the pace at which it is adding to the - public debt. The Minister, after making an elaborate attempt to represent as of no account the onormous increase in the public debt:under the "Liboral" Administration, turned to the commercial outlook, which, not without good reason, he was able to discuss in cheerful language. His subsequent observations showed very strikingly the truth of our prophecy, made during the., depression that became acute in 1908, that tho.lifting of the clouds would find Ministers as ready as ever to plunge to the utmost. The Government has evidently learned nothing from the sharp temporary set-back to the country's prosperity. In America, which recovered from a far more severo financial crisis in 1907 quite as quickly as New Zealand, and in which the tide.of prosperity is running again at flood, statesmen are not only talking economy, hut are putting it in practice. In New Zealand; however, 1 we have this talk of further plunging, and there are signs that Ministers intend to make up for lost time. "It was the earnest desire of tho Government," said Me. Mackenzie, "to develop industries and the country generally in the interests of the people. For a time they had been, obliged to hold their hands, but with the revival in the value of exports the coffers of State were in a position to enable the Government to go on with the policy of development." A stranger to New Zealand would read this passage as meaning that the Government, by wise husbandry, has such an enormous revenue balance that it is able to carry out vast developmental works without troubling the money-lender. But New Zealanders may well suspect that what Ms. Mackenzie means is that the /improvement in trade is to be 'celebrated by a further burst of borrowing. With our Ministers "development and "borrowing" are interchangeable terms. With a per capita revenue greater than that of most other countries, Now Zealand, owing to the extravagance of her administrators, must have recourse to loans whenever she wishes to improve her premises.

In opening his defence of borrowing'as a policy, Mr. Mackbhzie observed that "very often it was supposed that this country was borrowing recklessly." The financial papers, he wont on, had "declared that the Dominion was on the verge of ruin and that in Now Zealand living was high and wages poor.". Since Mr. Mackenzie has on moro than one occasion spoken with great heat of the wickedness of making' false statements of a vaguo character concerning New, Zealand, ho cannot object to a request that he should tell us when and whero any such declaration has been made by a financial journal. "So far as borrowing was concernod," so runs the report of his speech, "between 1891 and 1908 the total increase of the public debt was. £32,000,000. Tho in-terest-earning money invested during the same period was £30,781,000; in other words, the country was getting more interest than it paid." Wo are not'told whatb.cr_M.il. Mackenzie gave any details in support of this extraordinary contention. If he did not do so, he should repair the omission at the. earliest oppor- ► fcujuty. That soma of the ruanoj

borrowed during the "Liberal" Administration returns a margin sufficient to repay the interest upon it, even after the expenses of administration arc defrayed, has never been questioned; but it has never before, so far as we are aware, been claimed that on the total borrowing of £32,108,184 during the eighteen years 1891-1909 there has been a net profit. In the Year Book for 1909 it is stated that of this sum £5,158,800 has been raised for advances to settlers,, and this sum is singled out as a really reproductive investment. Several other items, such as "land settlement," "Native land purchases," "loans to local bodies," etc., are mentioned as items which/'may" be considered to represent interest-hearing investments. The total sum represented by this selection is £17,486,189. The loans are classified in the Year Book as being expended in "investments," "directly reproductive works," "indirectly reproductive works," and "unproductive works." From only the first two classes of expenditure is there any return for the payment of interest on the whole, and since even the "directly reproductive works" are chiefly railways, which do not pay, it is perfectly obvioiiß that Mr. Mackenzie is hopelessly astray.in his figures. But of course his error is,obvious enough without any such examination.' For if,' the more we borrow, the greater is the margin of profit after paying interest charges, we should expect" the taxation per head to have shrunk away to an insignificant amount. But what are the facts? The taxa-' tion per head rose from £3 9s. 2d. in 1891 to £5 os. 4d. in 1908, What is the public to think of a "policy of development" that requires for its defence such a travesty of facts as Mr. Mackenzie has given us ?