Borrowing.

Te Aroha News, Volume V, Issue 216, 20 August 1887, Page 3

Borrowing.

The "speaker next referred to borrowing, and the paper lie read at Christchurch. He found that the cost of the district railways was included in the amount expended during the last tin cc years. Eliminating this in* his yearly aveiage, the expenditure of borrowed money was further reduced, so that it stood for the nine years at L 1, .308,000, against L 1,781,000 ot Major Atkin-on. As to Sir John Hall's claim to have been more economical than Sir G, (irey, they must recollect that when the fhe-miihon loan wa.s boirowed Sir J. Hall had to undeitake not to borrow any more for tin cc years. His colleague, Major Atkii^on, did not loi=e a day in borrowing when the period of prohibition came to an end. He (Sir J. Vogel) was charged with crushing taxation. When he went into office crushing taxation was expected. There was a deficit of L 150,000, and the scale of expenditure iwis about a quarter of a million yearly in excess of le venue. He was thought to be mad when he undertook to forego fresh taxation that year, but he did so. The propei ty fds. average duiino- the tlnee yeain was lc.-s by a sixteenth than the rate when ho took olliee. Major Atkinson in ISSI boasted that the taxation of JBSO-81 wa» le-ji? than that of 1870 by 2s (5d a head. The taxation of 1880-87 was ~s 7d a head les-i than that of 1 880-81. It was well known he avoided taxation by borrowing money to the equivalent extent of the annual increase of the sinking fund. He read an extract from a speech of Major Atkinson to show that that gentlemen wished to do the s;une thing, but did not see how to do it. Of L7oO,()00 created in three years L 343,000 had been paid oft. He had convinced them, he hoped, that whether in extravagance or borrowing, Hall, Bryce, and Atkinson could give him points. When thoir follower? attacked him on these questions they really attacked their chief. He did not accuse them of these things, but merely showed that their charges against him applied more laigely to themselves. The speaker then proceeded to show the fallacy of Mr Bryce's statement " That a sum of four and a half millions had to be paid annually by the colony as interest on its debt out o£ the colony." Hg said the statement showed "-heer incapacity to deal with the financial question. The only amount the colony was liablo for was its own debt. The interest on the 31st March, 18SU, and payable outside of the colony was LI ,587,000. The ratepayers were liable for about L 300,000 outside the colony. The mortgage indebtedness was a partnership between individuals in which the lender of money had first lien on his proportion of profits. If the profits were insufficient ho had to lose the same as other investors. What was called foreign capital, invested by the gieat companies and tirms, such as Dalgetty, Milk, and Murray Roberts, the Kothschilds, Barings, and Hambras of the colony, they were mo3tly domiciled here, and well able to bear any losses, and the colony was in no way responsible. The total mortgage on country lands was about 21 millions, with an annual charge of about a million and a half, which was not a heaA r y one on a total production of agricultural produce for home us.c and export estimated at ten millions. The rest of the indebtedness, twenty millions, not included in mortgage, was for household debts to tradesmen, 1 the latter to importers, and those to wholesale houses. The same thing appeared over and over again. He gave an example of the cost of a hat that might appear three times in the return. Similar, iiidebte.clne.ss

in England ' aiiiouhfced probably to much more than a thousand millions. What would bo thought of a person who said that Great Britain was liable for it, and had to find the interest? The result, then, was that the four and a-half millions of Mr Bryce diminished down to a million and,ahalf, of which railways recouped *bout L3r>o,ooo, besides L.10,000 for Government services not credited here, but credited in Victoria for similar services. These same railways probably gave an addition to consumers and producers of more than a million annually. Sir Julius then showed elaborately the various amounts of foreign capital introduced into the colony. After deducting 1 tho interest paid thereon the amount totalled forty-three millions, which was the excess of tho value oi imports over exports from the first of the colony. Tho L43,OO(),OOO of introduced capital had fructified into a value of 128 million^ leaving a, balance of eighty-three millions, without counting roads and bridge*, which probably coat four millions more. The principal causes of depression were, first the fall in the value of produce and the high rate of interest on'mortgages ; second the increase in the expenditure of borrowed money ; third, the want of manufacturing industries. As regards the first cause, a speculative spirit "caused land to rise above its value as indicated by its producing power. But then that was less felt than a decline in tho value of produce. He showed how the fall in produce had been all in favour of tho moitgageo paitner who received a fixed interest, tho pnrcha-ing power of was largely increased by the fall in commodities. The fall in the rate of interest which was now taking place was doing good work, and would rai^e tho \alue of the land. The second cause was tho smaller expenditure of borrowed mono}. Everyone hud recognised that when thi* expenditure was leriseneda considerable amoun t of depression would follow. The figures, exclusive of the purchase of district railways, were as follows :— ln 1884-83 theie was expended fiom the public works fund, i,1,3W.000; 1885-6, LI, 287,000 ; 1886-7, LI, 167,000. The expenditure of the tii.st quarter of 1887-8 wa* L 231 ,000, or at the i ate of L 824,000 per annum. The whole community was ail'ected by the reduced expenditure both as regards the power of purchasing and the yield of revenue ; •■jtilt, the -\ery persons who most strongly urged the reduction of the loan expenditure were those who now most blamed the Government for the depression. He \\a» not unfavourable to a reduction of loan expenditure. Ho always contended for the construction of the trunk lines. That was the essential point in his policy. Borrowing could not wholly cease, and we should hope that piivate enterprise would, by the expenditure of capital, make up foi the loss of public expenditure.

Railways. The opposition which had been shown here to the construction of the Midland Railway was quite unaccountable to him. It would give a largo value to the land.s now almost valueless, and which would continue to be so unless the railway were constructed. The expenditure of the money, too, would benefit the whole colony. He deeply deplored the want of sympathy between different parts of New Zealand. Personally he wai favourable to completing the construction of the Otago Central Railway by private enterprise. It was utterly unjust to decry the value of the public workh policy. If it had not been carried out the colony would long since have been in serious straits; I,7oo miles of railway, 7,000 miles of roads, and 300 large bridges, besides smaller ones innumerable, had been constructed to open up the country. Wool had fallen in value one-half sinco 1569, and even then the runholders complained of the price. In round figures the railways had carried la^t year If "millions of tons,, 330,000 parcel?, nearly one million cattle, and 3V million passengers. It was utterly unreasonable to blame the public works system because of land speculation, because of the fall in the value of produce, because of the high interest on loans, and because of local in dustries having become paralysed by the diminished cost of foreign productions.

Colonial Industries. As bo the third cause, the want of manufacturing industries — (Applause) — it was necessary to raise the Customs revenue, and it was to be boine in mind that owing to the fall in the value of foreign productions any rise which they would be likely to make would not give so great a protection as that which had been enjoyed in times past. If the industries were not aided by an increased tariff, they ran the risk of putting out of employment the bread-winners now employed. From the time of his return to the colony he felt convinced that the development of local industries was an essential necessity. There was no value in the argument about protection leading to over supply. Under any policy there might at times be an undue accumulation of commodities. Sir Julius Vogel instanced the Kaiapoi Cloth and Woollen Fnctovies, which supported about GOO hands, with a weekly pay sheet of between seven and eight hundred pounds. Those employed are breadwinners for about three thousand people. The clothing factory would have been doubled, he was told, if tht> tariff as amended had passed. These factories benefited other industries. For example, they took 1,500 tons of coal from Westport, and oil to the value of &ix hundred pounds from a Dunedin factory. He then referred to a tablo he had prepared, showing the pioportkm of commerce, agriculture, manufacture, and transit in various i parts of the whole world. In New Zealand the figures showed that there was no parallel to the large proportion which commerce bore to manufactures. He claimed that the Government had given encouragement to all local industries. Owing to the active stimulus supplied by Mr Larnach, mining had taken a new departure. Mr Richardson had introduced the manufacture of locomotives and bridges. The contractoi s for the locomotives, Messrs Scott, had told him that of the £13,000 they wore to receive £10,000 would co in wages. In piopo a ing the new tai iff when Parliament met they would be guided by tho latett information they were able to gather, and it would be his desire to exclude from the increase as much as possible the necessaries of life.

Village Settlements, &o. He proposed dealing with the land question generally at Ashburton, but as regarded village settlements he was very pleased to find in Canterbury how remarkably successful they were likely to pro-v c in that province. Mr March, who had charge of them— a very old officer— told him he was thoroughly satisfied they would prove a great success. He (Mr March) had sent round to the various holders who had possession for more than six months three questions. Sir Julius read a large number of answers, ay hieh showed a remarkable amount of satisfaction on the part of settlers. Tho proposed alteration in the property tax rate he believed was at the root of most of tho opposition with which tho Government were now met. After explaining how the tax affected tho poor and rich men, ho alluded to Sir John reference, to Adam Smith and John Stuart Mill. The precise moaning to Adam Smith's doctrine of " Equality of Sacriicc "

was a, much mooted question, but #veni Mill- admitted that there could bo 1 ntf equality of sacrifice when people had to deny themselves the ordinary ; convenience* >, and comforts of life. The argument ofcMill, ■ on which Sir John Hall relied, that taxing wealth discouraged thrift, would logicallylead to taxing more heavily the poor than the rich. He (Sir Julius) ridiculed the argument that the property tax would discourage rich men trom accumulating. Theoretically it might have that tendency. He instanced a man with £50,000, who had to pay 12.500 to the property tax. Could they conceive that because he had to pay this ho would thiow away his pvoperby to avoid future payment? Would it not rather be the case that if he objected to the payment he would curtail his expenditure in pleasure to make it up? He hopeel they would pardon what he was abont to say. There was not only actual de pie c <&ion here, but a fanatical feeling.? bring everything down to the very worst. He found from the conversations he had hae? here with the honourable and iniluentia* men, that they wanted borrowing to entirelj cease, because thuy know that by so doing disaster would follow. They said they wanted disaster, because nothing short of it would make people insist on retrenchment. The outcome of this was to stop manufacture, driving away population, stop settlement, encourage cheap labour by cheap imports, and leave the country to land owners and land labourers. It was an awful picture. It reminded him of tho Australian squatter who wanted to import snakes and protect hi.* property from human beings. He told them frankly they might" drive people away from Otago by the j^looin with which they lecened any intending investors, but they could not get. the rest of the colony to lide for a fall. Already there were Mgiin of better tinier Interest was falling, mining undertakings were being taken up again by capitalists, a large purchase of land had lately been made in the North, and one was rumoured in the South. Kecuperation was not a matter of chance ; it depended upon the broad fact that human industry can only bo unromunerativo for a time. Bad times .supply their own cure,, and patience and industry must conquer in the end. Many who had listened to him. that night would remember when he had passed away that whatever might be his fault-, ho always urged them to be strong in hope and self-reliance. (Continued applause.) \h\ Fitchett moved, and it was carried, ''That the best thanks of this meeting be accorded Sir Juliun Vogel for the clear and .statesmanlike speech which he has given as to-night." In the earlier portion of his speech Sir Julius was subjected to persistent interruption, but dining the latter part the meeting was comparath ely orderly.