THE DOMINION'S PAWN TICKETS.

Observer, Volume XXXII, Issue 51, 31 August 1912, Page 3

THE DOMINION'S PAWN TICKETS.

A Job for James Allen

ONE of the biggest reforms promised by the Reform Party was the reduction of borrowing and the diminishment of the National Debt by the gradual payment of our numerous 1.0.U.'5. But. now that the reformation party is in power it has discovered that it is up against an impossible proposition. New Zealand has so consistently gone on the spree on the strength of borrowed money, and has so consistently cultivated the Wilkins Micawber policy of paying off one 1.0. U. with another, and devoutly exclaiming, "Thank God, that's settled !" that it now, possesses a really magnificent debit balance to compare with its mortgaged " great natural resources." People,,who have been accustomed to enjoying the prosperity induced by pawning their possessions, won't submit to the inconvenient economy necessitated by an endeavour to pay off an accumulation of pawn tickets, and a Government that attempts to withold accustomed luxuries in an honest endeavour to pay the country's debts stands the very best chance of becoming unpopular.

Premier Massey makes this admission : " The Government did not intend to stop borrowing ; they intended to go- on borrowing for lands for settlement, loans to local bodies, advances to settlers and workers We are taking authority to borrow a million and three-quarters for public works." In fact, Reform realises that if it doesn't keep on borrowing it can't last, and the accustomed drug has to be served out to the habitual inebriate (which is the people of New Zealand), or it will turn nasty. The country a year or so ago developed uncomfortable suspicions as to its financial position, whereupon Sir Joseph Ward invented an ingenious little scheme which showed how every loan could carry its sinking fund so as to extinguish every additional debt in seventy-five years. It was a fallacious scheme which couldn't work, but it sounded right, and the patient was soothed. But the patient must realise its position some time, and if it hasn't the courage to suffer a bit and toil hard in the unpleasant job of "working off a dead horse," the country is going to be cracked with anguish and shaken with droughty appeals for more loans.

James Allen, Minister for Finance, has discovered that for next year the Dominion's revenue will be .£10,984,----404, its expenditure .£10,863,068, and its surplus .£85,336, and as every bit of that tiny surplus is owed, and also needed for public works, etc., the position is that the country is paying everything it earns to the money-lend-er and is borrowing a bit more every time to buy groceries with. It is something like a man on a treadmill, he walks hard but he doesn't get any further. During the last eighteen years we have added .£44,518,104 to our public debt—.£20,916,768 has been added during the last four years. The public deht now stands at .£82,193,310. These figures are from James Allen, Minister for Finance, and they do not include money borrowed by local bodies. The Government borrowing alone works out at <£80 3s 9d per head, when money borrowed by local bodies is Added, the indebtedness per head can only be a couple of pounds short of a hundred. If it isn't .£IOO per head now it soon will be, and so, a couple of years hence, the farmer with property

worth .£1,500 and a wife and ten children can reckon that, family and self, he owes the moneylender .£1,200.

It is Treasurer James Allen's job to consider ways and means of paying interest on old pawntickets and redeeming as many as he can. It is Premier Massey's job to placate the people,, keep them imaginarily prosperous and carry on the development of our "great natural resources" by giving people what they have been used to getting. The two jobs don't harmonise particularly well. It is likely that Mr Massey will have to slow down on his job and James Allen get busy on his from sheer necessity—the price at which the last loan was obtained and the circumstances under which it was arranged suggest that the Imperial pawnbroker isn't taking much more of us and doubts his securities. It isn't profitable to pay off loans raised at 3_ per cent, with further loans raised at" 5_ per cent. But Premier Massey intends to go on borrowing for lands for settlement, loans to local bodies, and that sort of thing, while the rate of interest gets higher and crows, in the shape of ancient matured debts come flocking back to roost. * * *

Within the next seven years, 1.0.U.'s for twenty-three millions will be presented for payment, and as the revenue is only just about equal to the expenditure, one doesn't see how it's going to be done, unless expenses are curtailed in every direction, and the population-forced to get up and do its own work without pay or do without. The other alternative is to pay with further loans at higher rates. To pay yesterday's debts . with to-morrow's wages may be all right for a man, who can reasonably expect to die and eventually cheat his creditors, but nations don't die, and it isn't fair to bequeath debts to one's children. We are the posterity our fathers so glibly spoke of, and if we have received the benefits they declared they were providing for us with the money they didn't have, we have also to pay their debts and some of our own. If the Hon. James Allen, Minister for Finance, does his work properly he will wreck the Ministry and make himself the most unpopular man in these islands.