INDUSTRIAL DEVELOPMENT.

Temuka Leader, Issue 1605, 9 July 1887, Page 3

INDUSTRIAL DEVELOPMENT.

TO THE ELECTORS OF GLADSTONE.

ODE DEBT. In tlie last issue I tried to show that my views on Freetrade are perfectly in harmony with, those of the late Mr J. S. Mill. The only difference between the late Mr Mill’s views and mine is that he lived in England and I live in New Zealand If our exports 'were sufficient to pay interest on borrowed capital, and also pay for the goods we import, I should say “"We are right” But they are not, and consequently we are going to the bad. According to the recent Financial Statement our total indebtedness is nearly £92,000,000. A considerable portion of this sum, lam glad to say, has been borrowed within the Colony, and that portion of it need not give us any uneasiness. If all the money we owe had been borrowed within the Colony we could never become bankrupt as a nation. For instance, let us suppose that A and B live within the Colony, and that A pays B £IOO a year in interest. A is £IOO a year poorer, B is £IOO a year richer, but the Colony is neither richer nor poorer. If B lived in England, and the £IOO a year were sent to him there, the colony as well as A would have been £IOO a year poorer. In considering the subject under discussion, therefore, it is only necessary for us to deal with our foreign debt, and I find that for certain that amounts to close on £60,000,000. Our public debt is £37,558,553, but from that is always deducted the Sinking Fund. In my calculations I shall not allow for the

Sinking Fund at all, because the Sinking Fund is for the most part invested locally, and does not bring money into the colony. There is £14,988,602 lent on mortgage in New Zealand which is said to be Colonial capital, but lam afraid that a good deal of it is English. For instance, there are many people who receive from their English friends money to invest here for them; that money is invested in thp name of the people living here, and doubtless passes as Colonial capital. The money lent by Mortgage Companies also is, I suppose, regarded as Colonial capital, but in reality it is English capital, and we have to pay interest on it. But without considering that I find that our foreign debt is as follows Public debt of the Government ... ... £37,558,553 Foreign debt of Public Bodies ... ... 4,108,Q6Q Foreign Mortgage debt 832,5(^7

Total £58,499,720 That is certainly foreign capital, but I feel strongly inclined to believe that a good part of the £14,988,602 re-

ferred to above, and supposed to be Colonial capital is foreign capital in disguise. Putting this aside, however, and calculating interest on our certain foreign debt at the rate of six per cent. I find that we have to provide considerably over millions a year in the shape of interest. Now is six per cent, too much to charge ? In his Financial Statement of 1884 Sir Julius Yogei said the interest we are paying on the public debt averages 5| (5.33) per cent, while Ihe Timaru Borough Council is paying 7 per cent, plus exchange. I think 6 per cent, inclusive of exchange, is under the mark. I have, however, thrown off nearly £IO,OOO to provide for inaccuracies. But this is not all. Almost all the shareholders of our Banks, and our Mortgage, Insurance, Land, Shipping, and other Companies live out of the colony, and are in receipt of large annual dividends. I find also that 1429 absentees are paying property tax, and doubtless receiving large incomes. The incomes of these absentees, and the dividends of foreign shareholders must come out of the soil of New Zealand as well as the interest on our debt. Tourists to England and Australia, colonists who go Home to live permanently, and others who go away, also take money with them, hut 1 set them against persons who come into the colony and bring them, so I shall not speculate on that point. Who will speculate as to the amount we must find to pay foreign shareholders and absentees? This we can only guess at, and it appears to me that no one will say it is too much to place the amount payable to them at £500,000 a year, and if this is added to £3,500,000, we shall find that we must pay away to foreigners

£4,000,000 A YEAR.

I wish now everyone to understand that this money must be paid in gold. Paper money ceases to he of any value beyond the confines of New Zealand, and mothing but gold will be accepted by foreigners in payment of money due to them. What means have we of getting gold ? We have none except through our exports. Do not fall into the error that we have the gold we dig out of the earth: that is included with our wool, and grain, and mutton, &c.. in our exports. For these exports we get gold in England, and it is with this gold we must pay our way. This must be patent to all, but so that no one can doubt it I shall quote from one of the highest authorities on the subject. Bonamy Price, in his Currency and Banking, says:—

“ Gold exercises a most valuable function in liquidating the balances of international trade. All trade, as between individuals so between nations, is an exchange of property, of wealth, of goods. Every nation buys abroad with its own products, its own goods; it bas nothing else to obtain its purchases with. When a country has mine* of gold, gold passes as a product, just as cotton or wine. If the buying equalled the selling every day, as would happen with direct barter, the accounts would always be balanced of themselves; but an purchases and sales with one single foreign country ure not always equal, there remains on a given day a balance to settle, and that is done with an export of gold from the country which bought most to the country which has sold most.”

Please to notice again the last sentence. It means that if the amount of gold we get in England for the wool, and grain, and gold, etc., we sell there is not sufficient to pay for the amount of goods we buy there we must take the gold out of our Banks here, and send it Home to balance the accounts. The £4,000,000 a year interest, etc., must he paid in gold, and thus we find for certain the following result as regards our foreign account: — DK. Imports £7,000,000 Interest, eto, ... £4,000,000 Total £11,000,000 OK. Exports £7,000,000 Balance ... ... £4,000,000

Total £11,000,000 That shows that we are going to the bad at the rate of £4,000,000 a year, and if John Stuart Mill were alive now and this were pointed out to him, be would say, “You can afford to buy only £3,000,000 worth of foreign goods; you want the other £4,000,000 to pay interest on your foreign debt, lor if you continue importing at the rate you have been doing no po.ver can save the colony from national bankruptcy.” This is not a matter of opinion; it is not a question as to whether it is correct or pot. It is a fixed, indexible law of international commerce, which does not admit of even room for doubt. It is possible that it may be held that the amount required for the payment of interest is not so large. I have taken the exact figures of the Financial Statement, and unless they are wrong I cannot be wrong. But supposing that it could be proved that two millions wopld cover interest payable on our debt, that would only mean that instead of three millions we could spare five millions to buy foreign goods, and that it would not be necessary for us to contract imports so much as if the interest were £4,000,000. We should still be going to had, but not at suqh a headlong rate as it appears to me we are present. My honest conviction is that we lose more than £4'000,000 a year, and that we shall i find ourselves in difficulties before > long. J J. M. Twomet.