THE LOAN. TO THE EDITOR.

Otago Daily Times, Issue 12601, 3 March 1903, Page 3

THE LOAN. TO THE EDITOR.

Sir,—l reg-rot that owing to haste, and depending on memory, I mado a. mistake in my letter on tho above subject, which, you were so good as to publish in your issue of last Saturday. I said the present Government increased tho debt of the colony by over £14,000,000, but Acy decreased our annual charge for interest and Sinking Fnnd by nearly £30,000 a year. This is not correct. They decreased the annual charge for interest only, without any reference to tho Sinking Fund, by newly £30,000 a. year. Tho exact figures, taken from tho Official ifear Book, arc as follows:— Year. Interest. Sinking Fund. Total. £ £ £ 1890 .. 1,752,020 115,760 1,867,801 1902 .. 1,723,819 47,721 1,770,613 £20,201 £G3,05G . £97,258 Tint is the position according to tire Official Year Book, which cannot Ira questioned. The Government borrowed £14,000,000 in 11. years, but decreased the ammal charge for int-cre=t and Sinking Fund by £97,258. Tha,t is moro than cqun.l to interest oa £3,000,000 at 3 per cant., and means that \vc could borrow £3,000,000 more- without having to pay a single penny more than we paid 12 years ago. That, I think, is an extremely satisfactory result; but there is still a better test of our capacity to meet our liabilities. There is no comparison between, our ability to pay interest on our public debt now and 12 years ?.go. Tho colony 12 years ago was simply groaning under its burdens, and peoplo talked of repudiation pretty freely. Even the late Mr Froude, the historian, I believe, in his book " Ocoana," declared tiiat lie had a conversation with a New Zealand statesman, who tokl him that the intention in New Zealand was to borrow as long as possible «nd then repudiate. I am again quoting from memory, but I know I am substantially correct; and ret when the late Mr Ballnnce declared his i'ntewtion of raising no moro loans in England, the English money-lenders expressed great indignation on the subject. In fcho-a days, as Mr Coster, ex-manager of the Bank of New Zealand and M.H.R, for Sslwyn, put it, our loans wore simply "gobbled up "—subscribed for four-fold. There is no comparison* at all betwoemi our position now ami then. In my previous letter I showed that in 1895 39 per cent, of our annual revenue went to pay interest a,nd Sinking Fund; now, 29 per oent, of it suffices, or 10 per cent, less than seven years ago. Out .annual revenue is in round -numbers £6,000.000, and 10 per cent, on that amount is £600,000, or equaJ to interest at 3 per cent, on £20.000,000.. Allowing £5,000,000 for rairiiijt the loans, etc., wo could borrow £15,000.000 before wa should bt> in tho pame financial pofttion as we were in in 1895, with the annual charge of our interest and Sinking Fund swallowing up 39 per cwifc. of revenue. I think now, Sir, that I havo eliown that it is not, a, you urged, knowledge of our financial position, but downright ignorance of it, that caused tho British monoy-le-ndcr to ignore our loan. I have given statistical evidence of the extraordinary. prosperity of the colony. I showed that the people.increased their purchasing power by about 50 per cent., a.nd for further confirmation of this I turn to the Post Office Savings Bank returns. I find that in 1E95 tho amount on fixed deposit in the Past Office. Savings Bank was £3,310,879, the amount last year was £6,350,013, or almost double. I will not refer yoi , to further evidence of the prosperity of the colony, but I will ask how is it that tho ba-nke q,nd the other monetary institutions . which, were really in a state of insolvency when the present Government came into power, but are now paying dividends varying from 5 to 10 per cent.—how is it that they still decry tho Government? Tho rate of interest came down, but they arc more prosperous than ever. The dumb animal knows the hand that feeds it, but I regret to say that it is apparent thero are people in this colony who lack that faculty. I ask, also, would it not bo bettor to impress on tbft minds of our creditors tho facts which I lrave pointed out, and which absolutely provo that the colony is abnormally prosperous, than to cry "stinking fish," and practically eay thai we have ■already borrowed too much, and that we are squandering it foolishly. The fact that the borrowing decreased instead of increased tho annual charge for interest ■ proves that the money is invested reproductively and fa no burden on the taxpayers. We are in a position analogous to that of a farmer who has an undeveloped farm of land. In its uncultivated state it gave Tiim a hand-to-mouth living, but the expenditure of capital and labour on it now gives him wealth and affluence. That is the way with us. Wo havo a partially onlfcivatcd farm in the wholo oolony, and the more capital and labour ire spend on it the greater will be our reward. In order to develop our resources, borrowing is a necessity, and anyone who endeavours to injure our ability to borrow at the cheapest possible rato is an enemy to our well-beins:.—l am, etc., J. M. TWOIIET. Temuka, March 1, 1903. [This letter is referred to in our leading columns.—Ed. O.D.T.]