STATE ADVANCES.

Dominion, Volume 6, Issue 1573, 17 October 1912, Page 6

STATE ADVANCES.

REMUERA LOANS-

SIR. J. Q. FINDLAY EXAMINED

MR. POYNTON'S EVIDENCE. MORE ABOUT THE LEGAL POSITION. The inquiry by the Public Accounts Committee of tho House of Representatives into the administration of the State Guaranteed Advances Department under . pas£ Governments, was continued yesterday, Mr. J. B. Hino presiding. There were also present the Hon. Jas. Allen, Messrs, E. Newman, E. P. Leo, A. M. Myers, J. Crafgie, J. Hanan, Sir Joseph Ward, and Dr. A. K. Newman.

Mr. J. W. Poynton (Superintendent of State Guaranteed Advances) appeared for further examination. Before answering any questions he stated that he had looked into .the,'question of tho legality of granting loans to be paid beyond the year in which they were granted. He regretted tliat ho differed from tlw opinion of the Solicitor-General (published in The Dominion yesterday). As the board, however, would ue reluctant to grant further loans in view of the opinion given by the Solicitor-Ueneral until the Act had been amended it would mean a cessation, ot lending altogether. He therefore urged, as he had already done, that the Act bo amended.

In reierence to the 31 per cent lonns he had overlooked a circular sent out on -March 19, 1912, to local bodies. It was sent to every local body that had received provisional approval of 3\ per cent loans, ihe circular pointed out that Clause 70 ot tho Advances Act provided that the rate of interest on local body loans should Vi.l sanio ' as tllc rato at winch tho money was raised. The regulations provided that tho provisional approval of a loan did not constitute an agreement between the Board and a local body. Attention was drawn to these piovisions because the moneys authorised to be borrowed by the Act and its amendi'i , CO,IUI not, now be rais «> nt loss than 3J per cent. Although loans had been provisionally approved at 3J per cent, tho money could not now be advanced at less thf.ii 3 J. Local bodies were invited to renew their applications in accordance with the altered conditions. Some of them replied and some did not. This would explain tho To Awamutu loan (referred to in the proceedings ■ of the previous day). . . Mr. Poynton produced a return asked for on the previous day showing tho amount of outstanding loans provisionally approved at 3} per cent, as nil.- Some of the counties, ho said, had replied. to the circular and some"'had riot,..but'all that did were marked down at 32 per cent. ' . '■•' , .... •■; Wairoa Harbour Loan. ' To Dr. A. K. Newman: Mr. Poynton said that a loan of ,£78,000 was made to • the Wairoa Harbour Board. The member for tho district was Sir Jas. Carroll. Another. loan was made to the Motueka Harbour Board. Ho was not sure whether this harbour .was in the district of the member for Nelson or in that of the member for Motueka.

Dr. Newman: You said that the engineer's report was hostile to the Wairoa application?—No, it was highly favourable. ■■• ■ , . ■

After yourefnsed the application, , 'what two persons' came to ask for it?.—l am not sure; they were the persons who signed the application. One of them was the clerk of tho hoard. He was very clear in his reasoning; and convinced me that I had misjudged tho position. Is the fact of a railway going through there going to increaso the trade of the district? Witness said that if a railway went through, land in the district would be increased in value by £10 an acre. This would make the necessary rato a trifling burden.

Dr. Newman: What Minister signed the approval for Wairoa?—Sir Jas. Carroll initialled it.

To further questions, ° Mr. Poynton! stated that two members of the Advances Board were paid—Mr. Warburton received £150 a year and Mr. Kembcr £250 a. year. This was for their work in connection with Advances to Settlers' and Advances .to Workers, as well as in connection with advances to local bodies. •Mr. Poynton denied that the telegram from Sir "John Findlay had the effect of speeding up the Remuora loan. The previous delay had been caused by the neglect of the Rerauera Board to comply with formalities. Ho followed the mqney market pretty closely, but it had nothing to do with these loans. The understanding was that the Post Office should supply the money for local body loans. Tlie Post Office was not bound down to supply money at 35 per cent. If money got much dearer the" Post Office would raise- its rates. The amount lent from month to month varied, but the election had nothing to do with tho proceedings of. tho board. At this stage Sir Joseph War<l suggested that tho evidence of Sir J. G. Pindlay, who had been summoned as a witness, should be taken in order that ho might get away. This was agreed to, and Sir J. G. Findlay was sworn. Sir Joseph Ward asked for the file containing Sir J. G. Findlny's telegram to him aljoiit tho Remuera loan. Sir J. G. Findlay's Evidence. Sir J. G. Findlay said tliat .he had sent the telegram (produced) in reference to a loan.applied for by the Remuera Road Board. While iu Auckland in November he wos interviewed by the chairman of the Remuera Board, who informed him that a loan had been granted by the Department, but that the Department was sticking up the loan unnecessarily on a formality. He also etated that, a strike had been settled on the understanding that the men.concerned should go back to'work on the succeeding Monday. That this might be done it was necessary that tho loan should be granted. Tho men were suspicious that there was some understanding between the Government and the board about the loan. Ho knew nothing about the loan. It had been granted months before while he was in England. ■. ■ Mr. Allen said that the loan had not been granted; it had been provisionally approved.

Sir J. Findlay said that the difference was unimportant, ile was not sure whether any reporters were present when lie was interviewed by tho deputation. Tho contents of his telegram were mado known to the deputation, and he undertook to similarly make known any reply ho got from Ihe Prime Minister. The reply was communicated to the chairman and secretary of tho board, and also to the leader of the men. who had been strike—he thought that it was Mr. Simple. To Sir Joseph Ward: At that tinio ho w-as Attorney-General and Minister for Justice, i

Sir J. Ward: Did you at any time, on behalf of the Remuera Road Board, make representations to the State Advances Department, asking it to facilitate the granting of a loan?

Witness said that ho had no nuch communication with the Advances Department. He was interviewed as a Minister of the Crown.

Sir J. Ward: What did you mean by: "Wire me something that 1 can use." "Witness said, that he told the deputation that he would communicate tho reply he got. Frequently a reply from ono Minister to another was confidential. Ho wanted a rcDly that he could give to thes« people so that the workers could understand that there, was no bad fa'itbron the part of the Government'or the Remuera. Board regarding the loan. The telegram was. not sent for political purposes. The best answer to a suggestion of this kind would be that the telegram and tho answer were never referred to in any campaign in,: his support. Ho had never dreamt of using it in this way. Sir J. Ward next referred to a reply made in the House in answer to an interjection by a member, when it was mentioned that a Remuera loan had been authorised .just before the election. The reply by n. Minister was: "Ask Sir John Findlay." Witness could not give any other answer to this than ho had already done..

Sir .T. Findlay: No. I do not complain. He did not know the special circumstances. Quito possibly a baity perus.il of the telegram justified .the impression .he had formsd, Witness addid that, &s_

a Minister, lie had considered it his duty to communicate with, the Minister for Finance.

Sir Joseph Word: Iu Hint telegram application was made to mo for nn advance of .£IO,OOO. Was that granted or refused? —It was refused.

The Hon. Jas. Alleiu The document speaks for itself.

Sil J. Kndlay said that the deputation had said to him: "Don't lot tho work Lc stopped on Monday. Get us enough at least to (-tart the. work and carry it on." Sir Joseph Ward: You recognise that the State Guaranteed Advances Department cannot jr.ako any temporary, advance. That was iv matter for tho Treasury.

Mr. Allen: It was going to be approv t<l ou ilonday, though, was it not?

Sir.Joseph "Ward: That is not the point. To .Mr. Lee: Jn asking for the JiIO.OOO in his telegram,, witness did not know whether ho was asking for an. advance from tho Treasury or from the board. Ho did not appreciate the distinction which Sir Joseph Ward raised now. Hβ thought that he was asking for an advance on a loan current. Red-Tape Difficulties, Mr. Leo: Would you suggest as a Minister .that JiIO.OOO should have been, advanced before formalities had beeu complied with? Sir J. Findlay: Assuming that the difficulties were red-tape difficulties, i't would have been wise to advance that amount to relieve the tension of the situation at Uemuera. The member for tho district at the time was Mr. Lawry. He did not accompany the deputation which interviewed witness about the loan. He confessed that- the telegram was not sufficiently guarded against misconception, and in the absence of the explanation he had made he felt no resentment at the interjection which Mr. Allen made, in the House. . ■:

To Mr. Myers: In the same, circumstances be' would act in the same way again. Any man round the table would havo done the same. Most of the strikers in Kcmuera did not reside in the I'arnell electorate.

Mr. Hanan quoted 60ine newspaper repents of proceedings in tha House ■ when, the .Advances Department was the subject of. discussion, and questioned Sir Jolin'Findlay regarding their accuracy., , .. Mr. Allen: ATe we taking evidence on newspaper extracts. ■ . . ' Mr. Hanan continued his question, and Sir John Findlay stated that' he could draw no other conclusion from the newspaper reports and comments quoted than an imputation that ho or the (then) Government had used these local bodies for tho' purposes of promoting his Candida-, til re'. Such an imputation was entirely groundless, Ho had nover discussed with Sir Joseph Ward or any other Minister any advances to any part of that electorate. He knew nothing of these loans,except the one about which ho sent a telegram. The whole head and front of his offence was contained in that telegram.. Mr. Hnnan: Having regard to tho facts and what is known to you the statement that you used political influence or that it was an attempt on your part to swooten your clectorato is an extravagant' and wild fiction?' . ■ • . Sir JohuFindlay: I'should say it is political criticism. '<■ ,;• Mr. Hannn t Tho statement is entirely untrue ?—So far as .'my knowledge goes.

"Speeding-Up."

Dr. Newman: Do you think sending that telegram speeded things up in Wellington? —I don't think it did. I sent it to speed it: up. I wanted to get the money for these people. ■ , .Dr. Newman: Were you a candidate for tho district? , . Sir John Findlaysaid that the deputation waited' on him on the day after he arrived. How could a Minister dissever his character as a Minister from his character as. a candidate? He had only done what, his questioner or any other man would have done in his situation. Dr. Newman: I think the witness has no right to suggest my conduct. It is not under criticism. Mr. Allen: When tho chairman of the, board camo to you what did ho say to you?—l can't repeat his exact words. '■Mr."AHcn:"Did : he lead you to 1 understand that if this loan were secured it would help'your candidature?— Not in the least. My candidature was not vreferred to. Mr. Allen: Suppose this loan had been directly refused. Would it have affected any votes in tho district?—l don't think it would. Mr. Allen: Do you know anything about men at the Hobson reservoir getting a holiday?—l don't remember.

Do yon know anything about it?— No. If the question implies anything improper Mr. Allen: I am not suggesting that, you promised, these men a holiday. I wanted you to deny it. , The Solicitor-General's Opinion. The examination of Mr. J. Vs. Poynton was now continued by Mr. Hnnnn. Witness said that tho statement contained in the question submitted to the SolicitorGeneral by the Minister for Finance wns not correct. The board had arranged to Bet money from the Post". Office at SJ per, cent for loans granted. The regulations governing the making of .advances had been issued by the' Crown Law Office of which Mr. Salmond was tho head. Mr. Salmond" now said that these regulations were illegal.

Mr. Allen: Not tho regulations, the act of (he board.

Mr. Allen and Mr. Leo asked Mr. Hanan to specify the , regulation he was referring to.

At Mr. Hanan's requost Mr. Pornton read Hie regulation governing tho making of advances by instalments. Mr. Hanan went on to read newspaper comments on references in-tho House to the Advances Department.

Sir Joseph Ward said that it was only fair to Tecord that when he raised the question in the House both, the Prime Minister and the Minister for Finance denied that they had made any charges of political influence. Mr. Allen: Against tho board.

Sir Joseph. Ward: Against the Minister you said. x Mr. Allen: I said against the board.

' Sir Joseph Ward: You'snid against the Minister or the board, but if you charge the Minister with.using political influence it will be all the better.

Mr. Poynton repeated tho denials he had made earlier in the inquiry that the board had ever Iwen subjected to political influence.

To Mr. Hine, witness stated that the .£SOOO limit took effect on November 13. It would have been very wrong to refuse the Romiiera loan of <£12,000 about which Sir John Finding had telegraphed. To do so would have been, a shocking breach of agreement. Similar considerations applied to tho further Remuera loin of ,i37,0U0 granted in December. Tho .£SOOO limit -was not applied to loans which, hud been provisionally approved some months before. He considered that the board was c-n a legal.footing in granting a loan to be paid in succeeding years. There was nothing in the Act against it. Tho board was guided by what was in the Act, but if the board limited itself by the exact words of the Act it would be hobbled. The administration of the board had had the 'effect of curtailing the amounts that necessitous local bodies could obtain. Tho board had lent all that it could. He assumed that it was the duty of the board to do so.

Mr. Poynton at this etago asked leave to state that local bodies always burrowed more in the summer months than in the winter. This hail a bearing on tho amounts borrowed in November.

To Sir Joseph Ward: Mr. Poynton said that apart from the loss on moneys uninvested Hie whole of tho capital advanced to.local public,, bodies'was saved to the country. The practice was for the Trea-surv to find most of the investments required.by tho Post Office. Sir Joseph Ward put on record a number of loans finally granted in. tho districts of members belonging to the then Opposition, the present Government. Hβ explained that, ho did.so in order to show that the board had not been influenced by political considerations. He said that invercargill had been refused a loan of ,£32,000 for waterworks, although districts represented by (then) Opposition mombors had secured large sums for water-works. Jlossrs. Allen and Hino said that tho loan was refused after tho imposition of tho XSOOO limit. To a question by Sir Joseph Ward, Mr. Poynton said that notification of the refusal of the Invercargill loan could have been postponed until aft6r the second ballot. Mr. Leo asked that the Invercargill file' •should .be produced. "A Useful Exposure." .. Sit Joseph. .Ward rsa,d. the Moilmi

quotation from an artiolo published in The Dominion on September 30:— "Under the Ward Administration the State Advances Office went so far beyond the boundaries of common prudence, and transgressed so violently the spirit of the. Act, in its anxicty to make the Department an electioneering weapon,, that. it hnd to limit to iaOOO tho sum tho Department could lend to a county, under tho Act." Sir Joseph Ward stated that tho articlo was headed "A. Useful Exposure." Ho asked Mr. Poynton whether thero wns niiy truth in tho statetment ho had quoted. ... Mr. Poyntoji:. None whatever. Sir Joseph Ward: Is there any truth in this statement, made in the same, paper, on the eame date:— "Wherever it seemed desirable, during 1911, to hso the Advances Depart-, lncnt to sweeten au electorate, tho Government .appears to havo opened the purse-strings. Money was thrown at Tiniaru, at Blenheim, at Wa.nganui, the boroughs of Parnell, of Greymouth, of Miramar, and of Hastings. Even tho small proportion allotted to the counties was apparently allotted with an eye to tho fact that an election was to' take place in December. It is a shameful story of what a self-seeking and unpatriotic political group can do with the nation's resources when. the. party caso is desperate." ,;,;'■■ Mr, Poyntou: None whatever. Sir Joseph Ward • now referred to a loan to the Borough of Miramar. Was this'loan in tho district represented by I Mr. Wright?- :.. .... . : Mr. Poynton said he did not know. He was not sure-whether Miramar belonged to Wellington East. Mr. Allen: -Who represents it now? I ■am not suggesting anything, but you (Sir J. .Ward) raised a suggestion. Sir J. Ward: I am.referring t» my own case where a Minister of' the Crown said that, a loan was refused, in my electorato because it was a safe. seat. Surely that implies tho worsfkiud of South. American The committee adjourned . until 10,30 a.m. to-day..-.;. ■ ... . . .