Evening Post. SATURDAY, MARCH 8, 1913. STATE FINANCE

Evening Post, Volume LXXXV, Issue 57, 8 March 1913, Page 4

Evening Post. SATURDAY , MARCH 8, 1913. STATE FINANCE

If the report of the Dominions' Royal Commission proves to be a* valuable as its proceedings in New Zealand have been interesting, it will assuredly render a valuable service to the Empire. No Commission has ever sat iri New Zealand with a wider order of reference, and we cannot recall any that has collected more varied or more uniformly interesting evidence. .Wide as the scope of the Commission is, the limits have evidently been exceeded during the sittings in Wellington. As the Chairman l-emarked yesterday, after Mr. John Duthie had concluded his statement to the Commission, the financial position, of New Zealand does not fall within tho order of reference. But, after the excursion into the region of high finance, which Mr. A. E. Mabin had been induced to hiako under the cross-examina-tion of the Commissioners, it was only just to hear rebutting evidence. It certainly was not Mr. Mabirf's intention to damage the country's credit, but the most striking of his statements to tho Commission were, nevertheless, calculated to have that effect. "Then you say that the country is not paying it* way by four million pounds' a year?" asked Sir Rider Haggard. "That is what the figures for last year show," replied" Mr. Mabin, "and previous years were hearly as bad." The premises on which this conclusion was based are that tho country's liability for ifiUrest amounts to about four millions a year,. and that "our exports exceed our imports by something over a million." The estimate of our gross liability for interest is not far from the mark if the interest payable by local bodies is included, but the reference to the balance of trade is seriously misleading. The figures for last year, as Mr. Harold Beaucharnp ha* pointed out, werg far from averagefigures. With a single exception they were thft very worst of the fast seven years. In the bad yea." of 1008 there was actually a surplus of imports over exports amounting to £1,380,281. Of the other six years 1912— the year treated by Mr. Mabin as typical—makes the worst showing with a surplus of exports amounting to £1,099,304. but we have only to go back to 1910 in order to find tho balance as large as £5,857,078. The net annual excess of exports over imports during the last seven years, after bringing the year when there was a deficit into account, is £2,658,470 — more than 150 per cent, better than tho year which Mr. Mabin represented as not far 'from the average. In his interesting statement to the Commission yesterday, Mr. John Duthie dealt with Mr. Mabin's argument both in detail and on broad grounds. During the last twenty years Mr. Duthie has frequently been classed among the croakers, mainly because he has advocated the application to the public business of the same general principle* by which a successful private business is regulated; and has set his face against extravagance' of every kind. But Mr. Duthie has never been among those who have declined to recognise that any rational judgment of a, loan policy must be determined by the objects to which the money is allocated. To say that the Liberal Party has more than doubled the public debt since Mr. Ballanco declared that "we have- marched at a pace too furious to la-st, and have- piled up obligations that should make Bane men pause," is not to condemn the party until it has been shown that the expenditure has been of the wasteful kind that Mr. Ballance condemned. If it is true that this public debt amounts to tho enormous total of £84,353,913, it is also true, as Mr. Duthio pointed out, that £21,126,453 of this amount is topresented by gilt-edged investments that more than pay the interest on the money. This accounts for more than 25 per cent, of the debt, and the official estimate is higher still— 3o.3o per cent. The revenue actually produced by these investments is £772,187, which reduces the country's gross liability for interest and sinking fund from £3,239,905 to a net charge of £2,467,708. As against this there is, as Mr. Duthio points out, a Customs revenue of £3,165,657. It is unnecessary to go further into the details of Mr. Duthic's analysis of the public debt, which, though the facts ought to be fairly familiar to the people of this country, should bo of interest and value to the Commissioners as an antidote to the unfortunate impression that they had received from Air. Mabin. But ono telling point made by Mr. Duthie with regard to the supposed moral of the balance of trade deserves special mention. The import* of hardware during the year 1911 amounted to £1,735,978. How can it be maintained that such expenditure as this is helping the country to go to the bad? "Expenditure which is creating permanent wealth," cays Mr. Duthie, "nil! not bring about financial embarrassment." . Th| lefeftcm .of th§ inciMt if-Jltet^thg.

theory of Hie balance of trade requires moro careful handling than pome critics nro accustomed to give it.