THE HON. MR. WATERHOUSE HIS USE.

New Zealand Times, Volume XXIX, Issue 4160, 21 July 1874, Page 3

THE HON. MR. WATERHOUSE HIS USE.

(From the Dunedin Evening Star.) Mr. Waterhouse has not recovered his nerve, which seems to have been sadly shaken during his official career. He is filled with forebodings as to the future, sees nothing but ruin before New Zealand, and has undertaken the office of prophet after the fashion of Jeremiah. Minds of his class' have an unfortunate tendency to look only on the dark side of a question. If a cloud is over the land, and rain is pouring down, he can see every prospect of a deluge; but no sunshine to follow. If the sun shines and no clouds are to be seen, every green thing will be scorched up, and there will be no bread to eat. He has been scanning the financial horizon, and by the bank returns sees indications of tightness of money. No doubt properly read, they are good indicators of things to come; but if they are dabbled in by those who cannot understand their true import, they lead to prognostications as absurd as those readings of prophecy that foretold Louis Napoleon would be Emperor of the World. Men of Mr. Waterhouse’s class have their uses in the world ; no doubt he believes all he says, as do many other croakers; and as, by chance, like Murphy’s weather almanac, he may in some things be right, his visions of evil may appear so plausible as to lead to a thorough investigation of the grounds for his fears. If they be well founded, danger may be averted ; if baseless, our future course may be followed with confidence. But we have no apprehension of any serious interruption to our progress, so long as we can annually export sixteen to eighteen pounds’ worth of produce per head of the population. We do not expect that this ratio of production can bo continued ; because, as immigration progresses, a time will come when the consumption in the Colony will render export less necessary. Industries will be established that will supersede the present system of sending away raw material to be manufactured elsewhere, and returned with the added value of several profits for consumption here. But when this takes place there will be no balance against the Colony requiring adjustment by export of money or money’s value ; and the saving of cost of production will be so much added to the general wealth. Mr. Waterhouse’s notion is that a crash must come, because, ho says, every immigrant “ demands labor for twelve mouths instead of supplying it.” This is the key to his forebodings ; but either he has been incorrectly reported, or his words illustrate the danger of one-sided reasoning. It is true that every human being that comes into the Colony does require the labor of others, but it is not true that he does not supply any. The rate of wages, the readiness with which employment is obtained, the fact that extension of cultivation and of various industries is rapidly taking place, prove that each immigrant can be profitably employed; and since every man, in that particular form of labor to which he demotes himself, can produce more than ho can consume, it follows that, although ho requires the labor of others, he gives a quid pro quo in his own. Mr. Waterhouse is quite light when he ascribes the prosperity of New Zealand to other causes besides public works. Ho tells us it is owing to “ the rise in the value of natural products ho should have added, and increase in their quantity. His other reasons, consequent increase of confidence and the public works policy, cannot properly bo called additional reasons ; for “ confidence ” is the result of a knowledge of the paying character of an industry, and the “public works policy” is that of investing money in machinery and plant calculated to render industry more productive, and the public estate more valuable. As Mr. Waterhouse gives no reason to justify the belief that “natural products” will fall in value, the main foundation for our prosperity remains unchanged. Ho might, perhaps, have found a very rational explanation of what he thinks the “tightness” of the money market, in the obstructiveness of which ho and his half-educated class in the Upper House have been guilty, Thejr have opposed borrowing for the construction of special works, on special security. We suppose

Mr. Campbell fancies this is the way by which, according to him, the Council has saved the country one million of money. To our thinking they have rather taken steps to throw one million away. The case stands thus : the main lines of railway are constructed with money obtained on loan. This w r as necessary in order that capital should not be withdrawn from ordinary pursuits. If those lines do not open up additional means of production, the investment will prove unprofitable ; if they do, they will so cheapen production, and increase its quantity so much, that the Colony will be able to sustain an immense number of producers, and become rich through export of our surplus. But in order do this, extended machinery is needed beyond that which the public works policy has engaged to supply. Just as certainly as there can be no harvest unless seed is put in the ground, can there be no gain unless money is first invested. To avail ourselves of the advantages offered by a railway, money must be laid out in extending cultivation of land, building houses, opening coal mines, pm-chasing stock, erection of mills, the thousands of ways in which human wants require supplying, and in the construction of those branch lines, without which much of these extended works would be useless. It must be evident, therefore, that the conversion of floating into fixed capital that is, investing money in the machinery for carrying on business—constitutes of itself a great drain upon the resources of the country ; that is, it causes a great demand for money, but is not likely to result in a crash, so long as there is sound and reasonable ground for expecting a profitable return. If, therefore, any unwise restrictions are placed upon obtaining money to be laid out in the local necessary machinery of commerce, such as have been prescribed by the Legislative Council since the initiation of the public works policy, either the main lines will not benefit the Colony to the extent they are otherwise calculated to do, or money must be withdrawn from the ordinary course of commerce for investment in it. The sudden expansion of every form of industry is of itself sufficient to account for increased demand for money ; there have been other causes of a temporary character calculated to derange monetary affairs : the latter have passed or are passing away, and time only is necessary to secure the usual return for labor. But if special loans on special security for special works are refused, our progress will be checked to a greater extent than is imagined.