Borrowing.

Maoriland Worker, Volume I, Issue 1, 15 September 1910, Page 6

Borrowing.

(By J. M. TWOMEY.) No question can occupy public attention so all-important as that of borrowing. If you want to nationalise land, you cannot do it, because it involves borrowing. It you want to establish State industries the same thing applies. You could do these things easily if you could borrow the money in New Zealand from our own people, but you cannot do that. The people have not got the money to lend. This is the key to the understanding of the whole question, and it is not many who possess that key. We are British people, with British ideas, and we think that what can be done in England can be done here. It is a mistake. If England decides to nationalise her land she can do it, because her own people will lend her the money. In the some way she can nationalise her industries and do anything else she likes. The money is supplied by Tier own people, and the interest payable on her own loans does not leave the country. That being the case, monetary transactions of this nature do not make the country one penny richer or poorer. The money is merely transferred from one set of British pockets to another set, but in our case it is just the opposite. Our money goes into the pocket of the foreign money-lender as fast as we earn it. LAND FOR SETTLEMENT. To make my meaning clear, I will show what takes place under the operations of the land for settlement. Land is bought with borrowed money; it is subdivided, and then leased at a cercain rental, and then we flatter ourselves that that land is nationalised. It is not, and we deceive ourselves by thinking that it is. If it were nationalised, the rente from it would go into the public purse, and be used by the Government to partly defray public expenditure. These rents would either increase our means of developing the resources of the country or lessen taxation, and in that way the people as a whole would benefit by it. That is the object of land nationalisation, and unless that object is attained the land is not nationalised. In the case of the land for settlement that object is not attained. The rents for the land do not go into the public purse, they go into the pockets of the English moneylender, and what has, for all practical purposes, taken place is that we have transferred the freehold of our land from ourselves to Messrs Moses and Co., of London. These lands are, therefore, not nationalised, and exactly the same thing will occur in any enterprise where borrowed money is invested. You see what it means. You take away the freehold from one of ourselves and give it to the English money-lender. That gentleman will never spend a copper of the money with us, and consequently the country is in this way impoverished. THE COUNTRY'S LIFE-BLOOIX Now, let mc not be misunderstood. I am not condemning land for settlement. I am giving it as an example of what borrowing means, and I trust I have made it quite plain that it means depleting the country of the surplus profits of our labour. That to the worker means that it is impossible for him to secure the full result of his labour so long as interest must be paid to the foreign money-lender. This being indisputably true the interest of the worker in the rate at which the public debt is increasing intensifies. The more we borrow the more interest

we have to send out of the country, and the poorer the country is in consequence thereof. Our public debt is increasing at an appalling rate, as the following figures will show. In 1888 the public debt was £38,375,050, and on the 31st of last March it was £74,415,645. The increases for each ten years is shown as follows :— Year Debt Increase in 10 yrs. 1888 £38,375,050 1898 £46,988,006 £7,567,956 1908 £66,453,897 £19,415,891 Thus for the ten years previous to 1908 our debt increased at the rate of nearly £2,000,000 a year, but for the last two years it increased at the rate of £4,000,000 a year. The reply made to any comment on this is that a large portion of it is interest-bearing and consequently imposes no burden on the taxpayers- To give legal expression to this, Parliament passed an Act under which a new department has been created and £12,247,238 has been deducted from the public debt and placed under the control of the Advances Department Our public debt has by that process been reduced to £62,168,407. But this in no way lessens the liability of the Dominion, nor does it alter the fact that the interest payable on the debt must be dug out of the soil of this country. To consider our financial position proper!v we to add to our total public debt about £14,000,000 borrowed abroad by local bodies, and this would show that our total foreign indebtedness is over £88,000,000, which at 4 per cent means that we must send to London every year in the shape of interest over three and a half millions of money. That means that EVERY 25 YEARS we shall have to pay a sum equal to the original debt of 88 millions in the shape of interest, and shall still owe the 88 millions. Four times during the next 100 years the country will have to pay a sum equal to the original debt, or in all 352 millions, and then commence the next century with the same old debt on the backs of those coming after us. Mark again. This country must pay £352,000,000 to English money-lenders within the next hundred years and start the century with a debt of £88,000,000. _ That is the position at present, but if we continue to borrow at the same rate as the last two years, in ten years our foreign liabilities will be about £140,000,000. Now everyone knows that a country must pay her foreign liabilities out of her exports. There is no other means. We must export wool and gold and frozen meat, butter and cheese and other agricultural produce, sell them in London, and get the_ gold for them and pay our foreign liabilities with it. This being the case it behoves us to examine closely whether our exportable commodities are capable of expansion proportionate to the increase of our liabilities. THE COW AND THE SHEEP. A little reflection will show that we are almost limited to what the sheep and the cow yield to us. What is the evidence as regards these ? It is that the sheep feeding capacities of the back country are not by any means what they were in former days, and that even the application of manure cannot bring the front country up to former crop-producing standard. That is the evidence of experts. They say that the country is getting less productive, and if this is true and we continue to increase our liabilities as we are doing, nothing but disaster will end it. Besides this, exports cannot always be relied upon. In 1908 the value of our exports dropped by nearly £4,000.000, and even that created a deep depression. Supposing low prices lasted for two or three years as they often did before, what condition would this country have been in ? Half of us would have been ruined. LET ME SUMMARISE: Ist-—A country must pay her foreign liabilities in gold. 2nd —The prices of exports fluctuate, and are consequently not reliable. 3rd—She has no means of getting gold except by her exports. 4th—New Zealand's export-produc-ing capacities, according to expert evidence, are becoming more limited. sth—Care should, therefore, be taken to keep our foreign liabilities within the limits of the export producing capacity of the country. 6th—Borrowing increases our liabilities and depletes the country of her life blood. 7th—Borrowing transfers the people's interests in all enterprises to the English monej'-lender. Bth-—Borrowing contracts the opportunities of the -workers by taking away the natural increase of capital. 9th—The taking away of the natural increase of capital prevents industrial expansion and renders it impossible for the worker to get the full amount of his wages.

To explain clearly what I have attempted would take three times the space at my disposal. I am, however, willing to attend at my own expense any conference of workers and show them how to lessen borrowing without causing any great financial disturbance ; how to settle the p_eople on the land in a manner that will be acceptable to all and how to do other things efficiently. I will give the workers a pla-tform that will make them the most popular political party in New Zealand. Meantime, I trust I have put the evil effects of borrowing before my readers in a manner that will induce them to bring pressure to bear on Parliament to curtail the expenditure of foreign capital on palatial public buildings, at any rate. I regret the space allowed is not more. P-S.—l omitted to point out in the above article that borrowing in some respects has an extremely bad effect cm land settlement. The Government are borrowing money in London, and lending it to land owners in this country, under the Advances to Setu5 Set£ ct a * 4 * per c? 11 *- Tll is has had the effect of raising the price of land beyond its productive value. The result is that the price of land bought tor the purposes of settlement is so high that the settlers will not be able to make a living on it. In due course the land will fall back on the hands of the Government and the rents will have to be lowered. "What is happening now in respect of land is that we are creating, what ruined Ireland, absentee landlords. There are two classes. Those to whom borrowed money is lent on their farms and those settled on the land with borrowed money. It is, of course, impossible for mc to explain all this in the space at my disposal.