THE USE AND ABUSE OF LOANS.

New Zealand Mail, 30 December 1892, Page 21

THE USE AND ABUSE OF LOANS.

Sir,—ln writing on tho above subjeot, I do not wish to pose myself as an expert in financing, but on the principle of borrowing money for urgent and neceßßary publie works my experience goes to prove that loans are sometimes a blessing to a colony. No Government ought to neglect such works tos will be for the future benefit of a colony, if the money can be obtained at a fair price. The danger does not exist in getting the money because the country will have to pay the interest, but the danger lies in the malappropriatlon of the money in tbe expenditure—and herein lies the great danger of Government loans being misapplied. The constant applications which are continually pressed on Governments for purposes for which tbe loans were not contracted causes a heavy pressure to misapply the loans. This pressure acts in two ways. First, the direct, in Influence of friends who think the Government ought to do something for them. This is one of those unpatriotic feelings which is near akin to dishonest y. These friends of Government not only tempt and press the Government to do wrong, but they rob their fellow colonists of their share of the benefit of the loans fer which the united Colony has to pay the interest. And except Government is strong enough to resist temptation they are inovit. ably ruined by their friends, 'ibis was taiulv the case with the lateGoverument. £nd its effeot is bearing beavi'y on tho present Government, in that the loans borrowed to a great extent were spent on political railways and works that do not and never will pay the interest. And yet in spite of all this wrong application of the New Zealand loans, I would ask those who are most opposed to borrowing, whether they would rather the Colony should return to the state it was in before Sir Julius Vogel's publio policy waa commenced, or pay the interest on the money borrowed though unfairly spent, and I believe there is not one in one hundred who honestly and conscientiously considers tho matter, but will be of my opinion that the Colony as a whole has been a great gainer by that policy Tho sequel then amounts to this : If borrowing cheap money for necessary work?, though misapplied to a large extent, has been of suoU inestimable benefit to the Colony, as is plainly shown by the advance of onr present position, and fully pioved by our large exports and increased revenue, why should it not be equally beneficial for tho present Government to borrow more money to complete the unfinished railway lines, and to do other necessary works, which will be beneficial to the Colony, always supposing it is honestly spent on the woiks for which it was borrowed? Money iaa marketable oommodity, whioL, like other merchandise, if it oan be got cheap in one oouutry and spent or Bold to advantage in anotLer oountiy, will, if judiciously managed, produce a profit. Ia not this what is done by our banks and loan companies, which, if well managed, pay suoh large dividends? It is chiefly those that have benefited so largely by former loans that raise a cry againßt future ones, as they well understand that they will have to pay part of the interest out of the great benefit they have derived by the former loans, that is to say in plain English we have our railways to our settlements; and those that receive little or no benefit pay the interest. This, in my opinion, is unfair and dishonest. And this is onß of the chief things which the present Government, which were placed in their present position, to rectify wrongs, ought to consider above all other. Why should the North Central Railway remain in ite present

oondition, or the unfinished railways ol Otago remain in their present state ? whe» both would be of such great benefit to the Colony, encourage settlement and make revenue, and give work to all men under the present splendid system of 00-cperation established by the Government.—l am, &c, John Plimkkr. 12th November.