SIR R. STOUT ON THE CHEAP MONEY SCHEME.

Evening Star, Issue 9581, 29 December 1894, Page 2

SIR R. STOUT ON THE CHEAP MONEY SCHEME.

TO THE EDITOR. Sib,—lt is not customary for anyone who has signed his name to an article to reply to an anonymous<communication. «I waive, however, the custom so far as "Lex" is concerned. I had not overlooked subsection 8, section 42; in fact, I remember the discussion in committee on this very subsection. Has "Lex" read it? What does it provide? It allows anyone who has borrowed to pay the amounts borrowed by instalments, but these instalments do not immediately reduce the principal. These instalments are placed to the credit of the borrower, and he gets 4 per cent, interest on them only. He is paying 5 per cent., and the Treasurer stated in committee it would not pav the Government to allow repayments except in that way. If the. Government allow the loan to be reduced at any time, it will be contrary to the Act (see subsections 2 and 3, section 42), and it will entail a heavy loss on the State. The Government cannot repay their loan if interest falls, and if the borrower from the Government can do so, who is to pay the loss ?—I am, etc., Robert Stout. Dunedin, December 29. TO THE EDTTOB. Sib,—ln your issue of the 27th you publish an adverse criticism by Sir R. Stout of the Government aid to settlers scheme. While taking a different view of the scheme to that of Sir R. Stout, I fully recognise that few of our colonial men are better fitted than he to go into the merits and demerits of the matter. On many points of his criticism, however, he is plainly indulging in a little special pleading, and in some respects he has, I think, spoken hastily. With regard to the three requisites of Toynbee's test quoted by Sir Robert—i.e., that the soheme must be (1) of primary importance, (2) practical, and (3) must not diminish selfreliance —1 do not think it would be diffioult to show that all three requisites are complied with. I will, however, content myself with pointing out that Sir Robert quite fails to substantiate his assertion that the scheme fails in these respects. His ohief complaint against the scheme in toto is that it opens the door to corruption and tends to "spoon-feed" the farmers. Bad things both, no doubt. But Sir Robert will, of course, admit that the possibility of corruption occurring in connection with the working of the scheme is not a real objection to the principle of the scheme, or the scheme itself. Then, as to the ''spoonfeeding " and sapping of self - reliance alleged, how can this be said of a loan from the Government more than of a loan from a private lender. Sir Robert has often said that the State makes the best landlord; why should it not make the best mortgagee. But, I hear Sir Robert Stout complain, "your scheme makes borrowing easy." Perhaps it does, but certainly so did the fall of interest in the past, from 17£ per cent, down to 6 per cent., which he refers to. Logically, Sir Robert Stout aust consider this drop has done the farmers great injury, as it has yearly " made borrowing easier. Sir Robert goes on to state that only 1 per cent, (equal to £15,000) is left for a.ll charges, out of which valuers, solicitors, sinking fund, and expenses have to be paid. This is not quite correct, for in respect of payment to valuers and solicitors, there must be added to that £15,000 the solicitors' costs and valuation fees paid to the departmgnt by the borrowers* Sir Robert contends that if the Government lends money (to farmers it must consistently lend to manufacturers also, and if to these classes, why not to everybody. •' Once establish the principle," say a he, " that the State has the right to be a money lender, and logically it must lend to all classes of the community." I deny this inference Legislation is often, and rightly so, in part a matter of expediency, and it may be expedient to help a section of the people in a certain manner and not the rest of the community outside that section. But, cries Sir Robert, this is class legislation. Well, what if it is! We are quite used to class legislation, and it actually receives unconditional approval in many instances. Sir Robert Stout's Cabinet did not see anything incongruous in/ admitting free of duty the farmers' agricultural implements while oharging 20 to 25 per cent, to many other sections of the community for articles quite as necessary to them. That which Sir Robert calls "class legislation" is only an extension of a principle which is every day applied with approval. Why, even on our railways we treat certai classes of the public and certain classes of goods differently from others. Sir Robert asks: " Will it pay the farmer to come under the Act?" With all due deference to him, J, think the farmer may be left to answer that question himself. Sit Robert anßwerß the question in the negative, but the arguments on which he bases his answers are comparatively worthless, as his figures are quite misleading. "In the twentieth year," he says "if a farmer has borrowed JBIOOi there will be only £65 owing, and £6. is to be paid for interest and sinking fund. ' That is, there will be 9£ per cent. interest payable, and so it will go on increasing until in the thirtieth year there, will be about 20 per cent, payable. This is a twisting of facts and figures which will hot bear scrutiny. Under a private mortgage the borrower has to, pay his £6 10j of interest for his £IOO right up to the end of the term, and then has to pay the £IOO itself, whereas under a Government mortgage, the uprrbw'ej will pay only £6 a year, and 10, presto ! at the end of the term the prini cipal debt has disappeared. This is sufficient of fact for the farmer, and a sufficient answer to Sir R. Stout's quibbling. The latter here puts himself in an awkward corner. He has denounced the scheme because the rate of interest charged is not, he says, high enough to recoup the i Government. Very good; then the farmers get the benefit.of it. Not so, sajs Sir Robert; they pay 20 per cent, near the end of the. term. Very well, then surely the Government inafces a good thing out of it. But our critic will have none of that either, fp;r he' undertakes to ahow that both parties by some mysterious means lose money heavily oyer the bargain. Then, in his assumption that the borrower oannot pay off if interest falls he is mistaken. The borrower'can pay off at any time and take the benefit of any change in the money market, and this paying-off will not injure the Government if the money is obtained at 3£ percent., or probably even at 4. "I believe," says Sir Robert, " that we should have set before our people, as the ideol state to be attained, a farm tree from debt." We, the Government, and everybody, are agreed upon this head. But we. have fallen sadly away Jrom the ideal The wort* gage is a hard reality, and the Government wisely endea "ors to remedy an existing evil by the present benefibial soheme. It, the Government, puts before the people a way by which in a comparatively short time they may attain to Sir Robert's ideal state— solutus •omni fenore—instead of remaining sunk In the slavery of doUt and mortgagedom. In short, in their endeavors to picture the disadvantages of this aid to settlers, its critics remind me of the proverbial blind man in a dark room looking for a black cat which is not there, —lam, etc., » A.F. Dunedin, December 28.