BORROWING FOR PUBLIC WORKS.

Timaru Herald, Volume XIIC, Issue 13901, 12 May 1909, Page 7

BORROWING FOR PUBLIC WORKS.

/To the Editor of the " Timaru Herald." Sir, —It Is proposed to borrow £33,000 for town hall, municipal offices, streets, and waterworks, at not more than 5.J per cent, for fifty years, including sulking fund. Suppose .the money is got at o per cent., including sinking tunct, for forty-five years, a favourable supposition one would think, it- means that the citizens of Timaru will, in forty-five years, have paid £74,250 to replace "£*33,000; in other words, they will have ing £33,00*1 of bankers' money now, and repaying it by instalments spread over forty-live years. Rather a costly .method of advancing the interests of "the town! Looked at another way, we are bonding, not only tin* present , workers of Timaru for their working life, but the next generation of workers for a portion of their lives. Is that fair to them:- For. you must remem>ber, it is the labour of thy town you pledge as security, the very best security- possible, for the money borrowed. A former Council borrowed £60,000 for thirty years at 7 per cent., to build our waterworks. The thirty years are about expired, so that we have repaid the lenders .£I26,(XX), and still owe tlie £60,000. So you -see, the •-pioneer" Council pledged the workers of that day to pay £4200 yearly for interest, but nothing towards the cost of the works by which they benefited, Laving that, sis well as the continued payment of interest, for us and future workers to pay; and those pioneer Councillors were appfaiided* for their , foresight at the ratepayers' meeting. When we borrow from a bank we don't- get so much gold; we only get the-right, the permission, to use the hank's paper issued against the gold reserve; but, in order to get that permission, we must deposit municipal paper with the banker as security, in the form of bonds or debentures, to the value of £33,000, plus the interest multiplied by the number of years tlie loan lias to run, in this case, say forty-live years at 5 per cent, on £33,000.. equal £41,250; total value of security, £74,250. Our Councillors say their chief desire is to promote the progress of the town and the welfare of its citizens. Do they believe that such a method of spending the people's money will do either? Since our municipal paper, bonds, or debentures, is backed by better security than the banker's paper, why not use it directly to pay for our public works? That would surely be better than locking it up in the banker's safe, and paying so dearly- for the use of his. Why not issue, say, 33,000 one pound debentures, or a less number of one and five, and 10 pound ditto, divided into four denominations, £SOOO worth of town hall scrip, £4ooo* worth of municipal offices ditto, £6OOO road, and £lß,ooo'water ditto? By making these legal tender within the borough, and acceptable for rates, they would do all that the bankers one, five, and ten

jxjund notes will do. No one would be likely to object to take them in payment for goods, or services, knowing they could pay their rates with them, and also knowing their redemption was guaranteed bytho whole of the present and future wealth of the town, just as the redemption of our bonds and debentures for loans is guaranteed. The notes would he gradually redeemed out of the rates, and rents, paid for the buildings and services they were issued for. For instance: If the whole loan is carried by the ratepayers, we shall have to pay .-£1650 a year interest. If we used our own notes the £1650 would redeem 1650 one pound notes, so that the whole of the 33,000 would be redeemed in twenty years, while with the loan we shall have to pay that sum for forty-five years. In the first case the buildings would be our own in twenty years, instead of forty-five, but, better still, we should not lie burdening posterity with a debt we have no right to saddle them with. It lias been suggested to me that if the Council received these debentures in payment for rates, and cancelled them as redeemed, it would lack money wherewith to pay its way. But as they are only redeemd by rates, or rents rereived from the services they were issued to provide, it could only be a small portion of the total rates that would be required yearly to redeem them, and, as I've "shown above, a large portion of the revenue derived from those services would have to be paid for interest. making it, in any case, unavailable for current expenditure. Any debentures coming in over and above what could be redeemed would be paid out again by the Council and go into circulation just as bank notes do. Why not?. When we get bank notes in return for our municipal bonds we pay them out for material and wages for Imilding our public works. These notes circulate indefinitely till they come back to tJie Council in payment for rates; and that portion of them which is rcnuired t<? meet the interest charges due to the bank is paid into the bank and is cancelled so far as the Council is concerned. Where's the difference? Tf the nionfcr Council bad issued 60.000 £'l debentures for the original water scheme, and used as suggested, the waterworks would have been pm'd for fifteen a£o. and the £66.000 J>aid since would have more than paid

tor our drainage scheme and town hall, besides leaving us loss debt- by £60,000. Think' of it! Then we who are leit with that debt still to pay, would have had good cause to applaud them. I am nob airing some new and untried theory. On the contrary, what 1 am asking should be done here has been done elsewhere. In 1817 Guernsey built a market house on that system. In 1391) Fairhope, in Alabama, built a wharf; let our Harbour. Board emulate. Topolobampo, Sinaloa, Mexico. built seven miles of irrigation ditch by this plan, and so on, and surely what others have done we can do. The two cbie.f obstacles, I think the only ones, are the opposition of the bankers and moneylenders, and the ignorance and apathy of the |x»ople, and of the two. the latter is the chief. — I am, etc-., E. WOOD.