The Dominion WEDNESDAY, NOVEMBER 19, 1919. DANGEROUS METHODS

Dominion, Volume 13, Issue 47, 19 November 1919, Page 6

The Dominion WEDNESDAY, NOVEMBER 19, 1919. DANGEROUS METHODS

Though a good deal of latitude is usually allowed political leaders in exploiting public opinion at election time, there never was an occasion when there was greater need than at present for sound and thoughtful advice and guidance from men in responsible public pos ; - tions. With the people generally suffering an _ inevitable reaction after the strain of the war, tient under the stress.of the added burdens, and ever ready to find cause for grievance, the first duty of statesmanship should be to endeavour to exert a steadying influence and point the way to progress and bettered conditions along sane and sound lines. Nothing could bo more mischievous at the present time than that class of electioneering which leads the public to expect much whero it is obvious that little or nothing is really to be gained. In this respect Sir Joseph Waiid has a good deal to answer for. Whatever may be thought of his State banking idea, and his proposal to nationalise the coal mines, the pictures he has painted of the profits which the State could make from these undertakings to the relief of the taxpayers of the country will not bear even a cursory examination. His anticipations of groat sums immediately pouring into the Treasury from these sources are, in view of the facts of the situat'on, mere moonshine. Putting aside the merits of ?iationalisation altogether, and taking only the financial side/ of the proposition, and that is the only phase of th* matter ■ we are concerned with for the moment, it is as clear as anything could possibly be that Sin Joseph Ward's claim that the State would immediately add £500,000 a year to its revenues from converting the Bank of New Zealand into a State Bank and £250,000 a year by nationalising the coal mines of the country is a wild exaggeration, and. more suited to an irresponsible nonentity than a responsible political leader. If anyone should doubt this let him turn to the facts. Take thn coal mines. Sir Joseph Ward said in Parliament a few weeks ago, and we take the Hansard report becauso he had the opportunity of revising bis speech in that publication: We hive for years had trouble in tlio coal mines in this country on and off, and I believe tliat if under proper conditions tlie State controlled thesn mines we could Ret a qiinrler of a million out of tliein for the State. To this he added the opinion that the condition of the miners could be improved, that they could be given reasonably increased pay, and that tho cost of coal could be reducod to the consumer. So much for the glorious promise. Now for the facts of the position, and every figure here quoted, unless otherwise stated, is from the official records of tho Board of Trade llcport. The nominal paid-up capital in the coal mines of New Zealand is £1,290,784. The average ■ annual total profits over losses over a period of years from 1913 to 1918 was £65,583, tha nominal rate of profit thus beinu; 5.1 per cent. Tho total net working profit disclosed in the above figures of course does not represent the amount actually available for distribution to shareholders. Insurance, depreciation, sinking , fund, and other charges had to come out of it. As a matter of fact, in spite of insufficient provision being made for these charges a.erainst profits (vide-tho Board of Trade Report) the actual average dividend for the period 1913-18 was only 4.8 per cent. But in case it should be suggested that it is unfair to take a period of years, we will take the best year on record in the period mentioned. This was 1917, when the average dividend, grouping the whole of the inincs, wa5,5.3 per rent. Now here is a simple sum. The capital in the working mines is £1,290,78(1, and we will assume that Sik Joseph Ward takes them over at this price. This money will have to come from somewhere, and lie will have to pay for it at current rates, 5 per cent. Therefore, if the mines are earning only u.o per cent., and this without making adequate provision for insurance, deprcfcifKion, sinking fund, etc., how much will Silt Joseph Ward have to the good after ho. pays f> per cent, on the capital lie lias spent in purchasing the. mines'/ Plainly, he will have the ■difference between 0 per cent, and 5.3 per cent. But of course we shall lie told that under State management the mines will bn more profitably worked. That may be a matter of opinion, but lot us eon i.'pdc that such would bo the case. Fow much more profitably would they have to bo worked to secure tho £250.000 per annum which Sir Joseph Ward believes ho could mako

out of them? It is another simple calculation: £ ■ 5 per cent on J!l,230,000 ('2.50(1 10 per cent 125,000 . 20 per cent 250,(1110 Tims we have it that to earn £-250,000 the State would have to work the jnines four times nioro profitably than they arc worked to c7ay under private ownership. Even then of course the State would not have £250,000 of clear profit, hecause £62,500 of the total would be required to meet the interest charge ■An the money borrowed to purchase the mines. Actually the State would have to work the mines five times more profitably than they an worked at present before it could add to the revenues of the country by way of profits from the mine? £250,000 a year. Is there any sane person in the community who believes that the State could run (lie iiiiiips to earn 25 per cent, on the capital sunk where the private owners have not. been able to average 5 nor cent. 1 Of course no one who (lives the mntl.er any though I will believe anything of the kind. The mischief arises, however, from the fact that too often these electioneering utterances nre not closelv examined, and quite erroneous ideas are in consemience spread broadcast and accepted at their face value.