THE OTAGO DAILY TIMES TUESDAY, OCTOBER 3, 1922. BORROWING AND UNEMPLOYMENT.

Otago Daily Times, Issue 18675, 3 October 1922, Page 4

THE OTAGO DAILY TIMES TUESDAY, OCTOBER 3, 1922. BORROWING AND UNEMPLOYMENT.

When Sir Edwin Mitchelson in his speech in the Legislative Council raised the question of borrowing and its relation to public works he really opened up several aspects of the financial problem and not a few important points of public policy. Replying to a Taranaki deputation on the day prior, to Sir Edwin’s speech, Mr Massey said ho “realised very well that the dominion could not continue borrowing at the present rate for very long.” If the question of public borrowing could be considered as a single unrelated itpm in practical politics, then, in view of the state of the money market, the sound conclusion would doubtless be in favour of a- distinct “taperiug-off.” But it cannot be so considered. ' The dominion is committed to certain public works which must bo completed to a revenue-earning point. For their completion money must be borrowed. Even this point, however, is not the most important factor in determining public policy. The financial stringency following the war has created an unemployment difficulty. No well-governed State can afford to have within its borders a large, body of unemployed. While it may be exceedingly costly to borrow money to find employment for men in need of work it is even more costly and much more dangerous to have these men idle. The experience of Groat Britain is greatly in point in this respect. After spending something like -£100,000,000 in doles the Government has found it necessary to sanction credits amounting to £21,000,000 to help traders to recover foreign markets, as well as to guarantee loans to the extent of £50,000,000 for specified public works. In addition a further sum of £10,000,000 will be spent to provide work for the unemployed, and £95,000,000 will bo available in tho coming winter and spring from the unemployment insurance scheme. As a matter of abstract economic truth Great Britain cannot afford to spend these huge sums on the top of what has already been expended, but she can less afford to have an unemployed army in want. Fortunately that army is shrinking in numbers, but the volume of unemployment is still serious. To a less extent this is the problem which faces every Government, including our own, and therefore the question of hcrrowing must be considered with reference to other facts. At the same time it is imperative that the utmost caution should not only he exercised in borrowing, but more particularly in the expenditure of borrowed money. Relief works are notoriously expensive, but where the choice is wide, as it is in the dominion, expenditure can well he restricted to the most urgent undertakings and to those with the greater prospects of success. The larger questions which Sir Edwin Mitchelson’s speech raised call for careful consideration, hut whether Parliament could be persuaded to relinquish its control of roads and railways is open to grave doubt. Under existing political conditions a member is counted a success or failure largely according to his efforts in having public money expended within his electorate, and in certain cases the obtaining of a railway is supposed to set the final seal on his political reputation. This may, in some cases, have resulted in the imposition of a loss on the State, hut the existence of even a non-paying railway may indirectly he to the public advantage in the long run. The value of Sir Edwin Mitchelson’s speech consists in its timely note of caution, and his appeal to history is worthy of consideration. Ho was content, in view of tho prevalence of unemployment, to urge the easing off of borrowing “as was done in ISBB, with the result that in 1891 the. country showed its first sin-plus for twenty years.”