The Otago Daily Times. TUESDAY, MARCH 3, 1903. THE NEW ZEALAND LOAN.

Otago Daily Times, Issue 12601, 3 March 1903, Page 4

The Otago Daily Times. TUESDAY, MARCH 3, 1903. THE NEW ZEALAND LOAN.

The Honourable J. M. Twomey, with a rather entertaining assumption of omniscience, assured lis in a letter which we published on. Saturday last that the cause of the failure of the New Zealand loan on the English money market was " exactly what is alleged in London." The impending Transvaal loan and the criticisms which English newspapers have thought fit to apply to Australian finance are alone responsible, he says, for the fact that British investors practically declined to touch this colony's emission. That these factors contributed to the rebuff to which New Zealand has been subjected is, of course, perfectly clear. In the very article in our columns that excited Mr Twomey's indignation and prompted him to the heroic course to which he devoted himself in his letter of" raising up the spirits of those who may be downcast by things having been placed before them in a wrong light," we observed that the loan must have been affected by the causes mentioned. But it is impossible for us to hold with Mr Twomey that the colony has not in some measure invited the blow it has just received. And when the honourable gentleman dogmatically declares that the cause of the failure of the loan is " not any act or action of the present Government," we are simply unable to agree with him; for the policy of indiscriminate borrowing which has exposed the Australian States to the attacks that have been made upon them m the Daily Mail and other Home papers has also been in recent years the policy of the Seddon Government. It is idle to quote, as Mr Twomey does,' a table from the Year Book showing that the net borrowings of the Government in a period of 11 years amounted to £14,136,097, and to ask us where the excessive borrowing comes in. Even if we took these figures we might- show that the net indebtedness per head of the European has increased in the period covered by the table in question from £59 lis lOd to £65 ! 12s 4d. But Mr Twomey's quotation 1 is quite misleading. It shows that the average borrowings of the colony since tho Government assumed office have been not much more than a million and a-quarter per ■annum. But, to be perfectly fair, Mr Twomey should not include in his table tho figures of the years in which the self-reliant policy instituted, by M?

Ballance 'was adhered to. That policy lias been discarded by the Government, The signal on tho financial dial has been altered from •' slow " to " full speed ahead." And ifc is with these recent years when the Government has pursued a- policy that directly reverses that which it. espoused when it was placed in power that we are now concerned. Let M- Twomoy divide the period of 11 years into two portions of seven yeare and four years respectively, and he will then see whether there is not a good deal of justification for the belief which has found expression in some of the English financial journals that tho Government has lately been borrowing to an injudicious degree. Between ■IS9I and 1898 the public debt increased from £35,830,350 to £44,963,424—an average in seven years of £876,153 per annum; between iB9B and 1902 it increased from £44,963,424 to £52,966,447— an average m four years cf £2,000,755 per annum. The contrast between the average annual borrowings of the two periods should be sufficiently striking to impress even a Ministerial Legislative Councillor. We are not sanguine, however, that it will make any very distinct impression upon Mr Twomey. 'He will probably produce some new paradox similar to that which ho triumphantly paraded in his' statement that the present Government increased the debt of the colony by over £14,000,000 and yet decreased the annual charge for interest and Sinking Fund by nearly £30,000 a yeai. He improves upon this statement in a supplementary letter that appears in another part of this issue, in which he puts the annual saving in interest -and Sinking Fund at nearly £100,000! The Premier has, as ou. Christchurch contemporary the Press points out, been using m the North Island almost the identical argument on this point that Mr Twomey employed in his letter last Saturday. But Mr Seddon. will hardly go the length to which his daring admirer at Temuka ventures in the communication we publish this morning. Mi. Twomey pleads foi " facts and eg fiction." But we regret to say that this paradox of his is very unreal. Any comparison of the figures for 1902 with those for any year prior to 1894-5 is absolutely Worthless, ior in the latter year the system which had obtained in dealing ■with the drawing loan of 1867 was altered. If Mr Twomey wishes to make a legitimate comparison, let him take the payments for any period subsequent .o 1895, and he will have to admit that the paradox he has flourished before us is a purely fanciful creation. As a matter of fact, the amount paid for interest and Sinkinj, Fund out of tho Consolidated Fund in 1901-2 was £58,323 more than in the previous year. It is quite true that the percentage of revenue absorbed by the public debt charges has bsen reduced from 38.96 in 1895 to 29.80 in 1902, but it is grotesquely incorrect to infer from this, as Mr Twomey does, that- the colony is " 10 per cent, better oiT " now than it was seven years ago. Mr Twoniey ignores the fact that the ordinary, expenditure of the colony is not confined to the payment of interest charges, and that it has in these years been growing at a, rate that greatly exceeds the growth of the revenue. Thus, in 1895 the expenditure out of the Consolidated Fund totalled £4,687,3J0, but in 1902 it had grown to £5,895,915. In 1595 the excess of ' revenue ove. expenditure was £420,598, and in 1902 it was £256,924. And this heavy growth of expenditure has not been unnoticed at Home. It has, as well as the dependence upon borrowed money which the Government has shown, prejudicially affected the credit of the colony in England. But Mr Twomey will tell us that it is unpatriotic to make public mention of these things. Nothing, even though it be true, that is "susceptible of injurious construction,' , should, according to this authority, be published in the colony. The proposition is one to which no honest journalist—o* honest politician, for ,thafc matter—can subscribe. The patriotic course to pursue is to insist upon the finances of the colony being set upon a sound basis. When Sir Harry Atkinson took upon himself the task some years ago of putting the colony's financial house in order, and when Mr Ballance applied himself also to the same object, the effect was to place the credit of New Zealand in a greatly improved position at Home, And in order that it may again be rehabilitated a course somewhat similai to that which was deemed necessary 13 years ago will probably have to be adopted, whether our statesmen like it or not.