THE New Zealand Herald. AND DAILY SOUTHERN CROSS. MONDAY, JANUARY 23, 1882.

New Zealand Herald, Volume XIX, Issue 6297, 23 January 1882, Page 4

THE New Zealand Herald. AND DAILY SOUTHERN CROSS. MONDAY, JANUARY 23, 1882.

The credit of the colonies will be impaired unless they are more prudent in. the matter of raising loans. The English journals have given more than one warning on the subject, but without ' effect, although they must be regarded as to a certain extent representing and to some extent influencing English capitalists. It is true that the Home commentators on the financial affairs of the colonies are ignorant of many circumstances -which ib is requisite they should understand for the formation of an accurate opinion, but this which is known to ourselves is not known to their readers, and hence they accept -with too abundant faith that which they should carefully scan. But the contempt with -which this may inspire the colonist better able to form a sound opinion, however gratifying to himself, does not mend the position. What -we, in the colonies, have to do is not to confine our thought to what Home thought should be, but -what it is, and at present it is such as is inimical to the borrowing propensities of the Australasian colonies. After all the colonist is not much better than the English commentator, each sees the question of borrowing almost exclusively from his own point of view, a rery imperfectpoint of view. It is but a. short time since that the credit of New Zealand since redeemed by the energy and prudence of the present Government formed the subject of adverse discussion in the English journals and on the London Stock Exchange. That got rid of, we have now adverse comments on the loan about to be raised by New South Wales, hence our present remarks, because the condition of affairs is perilous when the creditofacolony forms the subjectof discussion ; like the virtue of Caesar's wife it should bebeyond suspicion. The credit of the Australasian colonies is unimpeachable, because they are always able to meet present demands, and as regards the future offer the security of large undeveloped resources, to say nothing of that other development arising from the influx of population and the rapid increase of wealth. But it must be admitted that English capitalists, whilst quite wrong in questioning the financial stability of these colonies, are quite rightsometimesin dissenting from the management of the financial affairs of some of them. Let us take die case of New South Wales as one instance. It has a splendid revenue from Crown lands, its total revenue is vastly in excess of its expenditure, and yet it is now about to place a fresh loan on the London market. The English capitalist wants to know why, and his question is a pertinent one, because' unless the land fund be diverted from the purposes to which it ought to be applied it should be sufficient to meet a reasonable annual expenditure on railways. We may take another instance, that of "Victoria. Its railways, though improving, do not pay the interest on the amount borrowed for their construction, and the position has not been improved by the recent construction of branch lines to act as feeders to the trunk lines. The time is fast approaching when the earlier loans, representing a large sum, raised when money was dear, will fall due, and it ■would be possible to substitute for six and live per cent, interest one varying between four and four and a-half. It being extremely important that the general revenue should be relieved of the burden of supplying the balance of , interest not earned by the railways, and it being further important that the English capitalist should know that the interest paid him is interest earned, it might have been expected that the Victorian Government would, for a time, have desisted from further borrowing and have allowed the substitution of debentures at a low rate of interest for those at a higher one to balance the interest account, relieving the general revenue and improving the value of the asset. Thai£-would certainly be the proceeding of any clear-headed financier. Sir Bryan O'Loghlen, the Premier and Treasurer of the Victorian Government, has not taken that course, not because he is not clear-headed, but because he is swayed by considerations which ought to be foreign to financial operations, and are an infinite danger when connected with them. Sir Bryan O'Loghlen entered office without any party that could keep him in office for a week. He was tolerated by the Conservatives because he kept out Mr. Berry, and would serve their purpose until they saw their "way to replace him. But unless his position was to remain thus insecure it was necessary that Sir Bryon O'Loghlen should find some means of strengthening it, and so he discounts the gain to ai-ise on the debentures about to fall due, and announces a fresh loan, which he says will add nothing to the burdens of the colony, because the interest will be provided by the saving of interest on the extinction of the earlier loans. He disregards the opportunity for balancing the railway account. Why , ? Because his political exigencies required it. This is not the only instance

of a political loan, of a loan issued to J buy political support, and keep a Government in office. But it is monstrous that the credit of a colony should be pledged to keep a Ministry in office, and we doubt whether there is one in which it has not occurred. "We doubt whether there is a colony in whieh railways ■would not have paid interest on the money borrowed for their construction if they had been made on their merits, and not from political considerations. If Ministers be blamed they would say they -were the victims of the pressure of the Parliamentary representatives of the people. If these were blamed they would plead the pressure of their constituents. All this is true, and creditable neither to Governments nor representatives, who should be influenced by a larger sense of responsibility. This aberration will last so long as railways are demanded and Parliament is the source whence they alone can be obtained, but, notwithstanding, it would be a mistake not to take note of the tendency adversely to criticise colonial loans, as evinced by the strictures made in England on the present loan proposal of the Government of Nevr South Wales.