FINANCING THE RAILWAY

Poverty Bay Herald, Volume LXI, Issue 18466, 3 August 1934, Page 11

FINANCING THE RAILWAY

(To the Editor of tlie Herald.) Sir,—ls “Looking Forward” to be commended for his helpful suggestion towards financing all national undertakings', the railway included, by what lie calls debt-free national credit? One wonders if his proposal means a revival of the method adopted by Governor Fitzroy about 90 years ago to cope with the colony’s financial troubles. Professor Condliffe tells us that the Governor had not sufficient funds, but issued Government debentures which were made legal tender so that people had to take them as payment from the Government. This action led to disastrous financial difficulties. Rates of interest for accommodation from the few existing banks ran up to 15 per cent, and over. The debentures quickly fell in value because nobody wanted to buy them, and the result was ruinous. “This,” says Condliffe, ‘‘is one of the clearest examples possible of the folly of governments meddling with the money system ol a country and the experience of New Zealand's first years ought to he a warning against any more attempts to relieve the public finances by printing pieces of paper and calling them legal tent let money."—Yours, etc.. LOOKING BACKWARD.