It would, however, be going too far to conclude that
there will be no expansion of this kind of public debt in the
future. In relation more particularly to transport, there is an
opportunity for creating or purchasing railway lines or
canals of secondary importance, as in other instances there
may be one for an extension of public forests. The German
States show an example of the former, which is also found
to a smaller extent in the French Departments. Arterial
drainage or reclamation of waste land might also be carried
out in the same way, and the loans for such objects should
be governed by the same principles as those applicable to
municipal debts. So much depends on the future course
of political movement that no prediction is possible ; but
for Finance it is sufficient to dwell on the necessity of
applying the same rigid tests to all classes of borrowing,
and to insist on the danger of its undue use.

8. The great importance of adequate control by the
central government has been already indicated, but it is
desirable to lay emphasis on the fact. If expenditure and
taxation cannot be safely trusted to administrators who
may be led astray by ignorance and prejudice, still less can
the power of mortgaging the property of those under their
rule. For this reason a rigid supervision is exercised in
most countries. Local bodies in the United Kingdom can
borrow only by a special legislative act, or after a semi-
judicial inquiry by officials of the State. In France
authorization is in like manner needed for communal and
departmental loans. The American state constitutions often
place limits on both state and municipal borrowing powers,
and the latter are also regulated by the state legislatures.
The convenience, indeed the necessity, of some method
of the kind is obvious ; without it a numerical majority of
the district, perhaps possessing little monetary interest in its



CHAP. VIII.] LOCAL INDEBTEDNESS. 635

future situation, could burden all the holders of property
and future residents with a load of debt. Heavy taxation
soon brings a remedy in the impatience of the taxpayers ;
but borrowing is for the time an agreeable process whose
evils are only perceived later on. Thus the creation, the
amount, and the mode of repayment all stand in need of
due regulation by the supreme authority of the State. The
method employed will of course vary with the particular
circumstances, but it seems best to reduce the system to a
set of general rules limiting the amount obtained to a cer-
tain proportion of the taxable value, requiring definite
reasons for the issue of each distinct loan, and providing
for a sinking fund or other effective means of repayment
within no very distant time. These conditions are all
insisted on by the English Local Government Board, and
they seem to be necessary for the protection of those
concerned. When exceptional cases arise, an appeal to the
central legislature is the proper way of dealing with them.

The character and scale of the particular bodies con-
cerned should be further taken into account. Temporary
loans by a large city, repayable on demand or within a
short period, must be soon met out of taxation, and they
may be allowed under the same rules as those controlling
the taxing power. There is no necessity for the same
constant check as that essential in the case of small areas.

This power of regulation and its efficient exercise show
the real unity of all public liabilities. Whether contracted
by the State or by local administrations, they result from
the use of the credit obtained through public property
and the power of taxation. Their examination, therefore,
must be conducted on the same principles, and their effects
must be combined to reach the total result.