Page:Indian Journal of Economics Volume 2.djvu/350

 886 H. STANLEY JEVON$ by the Government of India to Local Governments, and by the latter to municipalities, should be abolished, and freedom should be given to all Local Governments and local Authorities to contract loans for all public works, whether reproductive or not, a proper control being exercised over the purpose of the expenditure and the period of repayment of the loan. As alresAy mentioned above, the period for repay- ment of the loan required to construct should coincide with the estimated period that work will remain in service. usually not be constructed unless that the net revenue likely to be sufficient to more than cover insraiments of repayment of on the capital outstanding, within the estimated life o! The burden which a loan imposes upon recurring expenditure consists of both in- capital repayments, and in estimating the be imposed upon an undertaking or, in non-reproductive works, upon the future the work. the future terest and bin'den to the case o! taxpayers, is repaid by tal sum the nishing any work for which The work should the estimate shows yielded by it will be the combined annual the loan and of interest If a lean the represents a continually annual charge. The the burden can be equally immediate and more distant only plan by disibuted between future is to adopt annuity method, making the loan repayable by annual insraiments consisting of interest and repaid combined. x In this case, since interest plus insrai- ment of capital repaid always amount to the same sum, the interest represents a eontinually diminishing part of the whole insraiment paid to the lender. I The initraiments are per nmre often ealeultel half-yearly, or some- times quarterly, or even monthly, Full information s to the necessary osdeu for d me will be found by referring to the following work: Th Repaltn,t o! Loca a otter Loans by E. H. Turner (lmblisel by %he Martchester University Prelm; 19lB), eapi- dimi- which the the equal capital both must be tken together. equal annu,l insraiments of interest