The Southland Times. PUBLISHED DAILY. Luceo Non Uro. THURSDAY, 31ST AUGUST, 1882.

Southland Times, Issue 4413, 31 August 1882, Page 2

The Southland Times. PUBLISHED DAILY. Luceo Non Uro. THURSDAY, 31ST AUGUST, 1882.

Mr J. P. Joyce, the member for Awarua, must have thought a good deal of his speech on the loan question, for we find it reproduced at length in the Southland News, a paper understood to be under the editorial control of the speaker. Mr Joyce expresses himself well, and his efforts are, no doubt, far above the average of Parliamentary oratory. But, unfortunately for himself, he is capable of making his most elaborate displays on subjects of which he knows nothing. This speech, for which he lias been so ill-advised as to seek a wider auditory, is one that it would have been to his credit had he never delivered ; ov that, having delivered, he had allowed to sleep, as far as it was possible for it to sleep, in the pages of Hansard. It is about the most lamentable exhibition of ignorance of the very elements of political economy that it has ever been oar lot to encounter, and, coining from a legislator, is simply prodigious. Some time ago, it is true, the" same ideas were broached by Mr Macandrew, but only to be snuffed out speedily by the application of the simplest ; economical reasoning. Again Mr W. Hutchison, M.H.R., whose harebrained agitation on a variety of subjects has made him notorious if not notable, has resuscitated Mi- Macandrew's vagary, and: Mr Joyces in a fervor of admiration^ breaks the silence that otherwise he" 1 might have maintained, ! And this brilliant idea is that borrowing

for State purposes would be m\ich less a burden, if the loan were taken from the citizens of the State themselves. The leading notien of Mr Joyce is that the mere fact ofthe interest being payable brthe^colony would warrant a higher interest being paid. Tbis is a fallacy so very transparent that it is amazing it shqnld-impqse^npon anyone.-^ It-is^cleaE?-that the burden on the colony is precisely the same whether 'money be borrowed within or b%ond its borders, ft" is USSEfIf cleafthit not one fafthing^mote 1 is spent in the v colony because^ the interest is drawn by residents there, and not. by- strangers.'* If ouv-own people purchase a loan, it is simply an exchange ' of investment, and * they .hare^no more to spend as the produce of the new investment than they had as the/ produce 'of the old, supposing the rates of interest to' be equal.' If money lent for purposes i of trade be. called up and invested in I loans, then foreign capital must be called^ { in to keep trade going, so we are exactly" , where we should have been if foreign capital had been invested in the loans, ' except that'it would cost us more for interest, for we should not have Go\eminent security to offer. Then as to the interest tfiat we send away to pay for the use oi, foreign capital, there is something j absolutely ludicrous in the following statement of Mr Joyce ; — " It appals " me sometimes," -_c says, "to think " of the enormous amount of raw material v that is going on board ships to. be sent' " home to. rpay interest to the public " creditor there." Whj should it appal him ? Why was the money borrowed ? Because it was worth the interest to us, and probably a good deal more. If we borrow abroad, we borrow because money is cheaper there, or because we have it not in sufficient quantity anywhere among ourselves, The State does not borrow unless it is profitable, in some shape, to borrow, and neither does the private individual ; and if we make a profit after paying the charge, why should paying the charge appal us? We might just as well grudge the remittance for imported goods that we consume, or for machinery that we import—possibly machinery that is intended to yield us annually 10 or 20 per cent, on its cost. A nation that acted on Mr Joyce's principle of using no money that they could not raise among themselves might be the greatest fools on the face of the earth. Suppose, after having utilised all their own capital, they borrow a million at 5 per cent., which they employ to yield them 10 per cent. ; they have to send, it is true, 5 per cent, out of the country, but they are £50,000 richer by the transac tion. The principle that Mr Joyce advocates would strike at the root of all transactions of credit, simply because the sad operation had yearly (or half yearly) to be contemplated, of interest going out to a " foreigner ; " for it is clear that the persons who receive the interest are all on the same footing as regards the borrower, and are "foreigners" to him. It is simply true, that the spectacle that appals Mr Joyce may indicate the very life of a community — its capacity, that is to say, to absorb foreign capital to an enormous extent, and to make a profitable use of it. But we want to point out another weakness in Mr Joyce's contention. He speaks as if something bad to be done specially in order to make our loans available for New Zealand purchasers. There is no such need, however. If any colonial capitalist " fancies " New Zealand stocks, the market is as open to him to invest as to any man in England or elsewhere. All he has to do is to employ a broker, and his wish is gratified, if he only offers a sufficient price. So it is altogether a hallucination in Mr Joyce to suppose that it needs special legislation to make lenders to the State of his fellow colonists. Some glimmering ofthe want of a base for their argument seems to have been got by Mr Joyce and his friends, for they speak of the " eight millions ster- '* ling lying available for profitable in- " vestment in the banks of this colony." These gentlemen seem to have a strange idea that because this- amount of money is in the hands of the banks it is lying idle there. They forget that if the banks could not employ the money they would not take it and pay for the use of it. The mere fact that the banks hold it, is the proof that it is no more than is required to carry on the trade of the country. If it were to be withdrawn for investment in loans, then, as we have said, it would simply have to be replaced, or else trade would stand still. We have no space to take up fully the other points dwelt on by Mr Joyce, such as the bank monopoly, and the hint he throws out that domestic lenders might be pounced upon for a contribution to the taxation of the colony . We confess we do not know very well what is meant by a bank monopoly, the field of banking being open to all comers, and being, in point of fact, occupied, to a great extent by three banks, of which the citizens of New Zealand are largely shareholders. Neither have we space to notice at length his singular notion about taxation, according to which one class of the community is to contribute nothing towards the revenue, while enjoying, with all the rest, the protection of good government. We confine ourselves to the argument touching immediately the value of local borrowing. It is to be hoped that we have made plain enough the fallacy of Mr Joyce's reasoning on this point, We have simply to ask, in conclusion, what the Colony would come to if men like Mr Joyce and Mr Hutchison should by any misfortune have the opportunity of putting in practice their precious theory of borrowing ? Imagine them borrowing on the spot at 6. or 7 per cent — this is Mr Joyce's own suggestion — when they could borrow, in Britain at 5 per cent or less — -and all to keep the interest from going out ofthe Colony 1 And this is the wisdom of our legislators — the wisdom that must be embalmed in Hansard, at the expense of a grateful country, and for which, as embodied Jin each senator, we are paying at the rate of six to eight hundred guineas a year.