One of the most important points of the Budget speech
was Sir Stafford Northcote's complaint of the rapid growth of the system of borrowing from the Government for local purposes at a low rate of interest, a system which has increased upon us so rapidly, that whereas last year only £213,000 was estimated as needed to be borrowed to meet the loans of local authorities, this year the same estimate figures for just double, £425,000. Of course the interest paid by the local authorities increases in like proportion, but then we are at present committed to lend at a very low rate, and if the rate of interest rises rapidly, we may be losers by the transaction. Sir Stafford Northcote deprecated the growth of this system, and intimated his desire to check it by any method in his power. He did not think the sub- stitution of the State as creditor in so many enterprises, in the place of private creditors, at all desirable, and in this be was strongly supported by Mr. Gladstone, who said that the rate of interest required by the Government for such loans should be based, " not on the actual state of the money market, but on a survey of a series of years, in such a manner as fully to guard against danger." No doubt, for the State to undertake an immense banking business, borrowing from the public, and lending to local authorities even at a profitable rate, is not wise. The attitude of mind most desirable in a Chancellor of the Exchequer is not the attitude of mind most desirable in a great banker ; and the confusion of the two capacities might lead to a deterioration in the quality of our Chancellors of the Exchequer.
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