COLONIAL ECONOMY.

Temuka Leader, Issue 1612, 26 July 1887, Page 2

COLONIAL ECONOMY.

TO THE EDITOR. . 1 Sir,—l have just read with grejat pleasure Mr Twomey’s address to the Gladstone electors, and I wish that all the electors of New Zealand could read it. It has been objected to the establishment of a State Bank that it would be a species of Protection. I think it may be advocated on that very ground. We might to manufacture our own State Bank notes, and to use our own assets as banking capital, instead of importing Englishpaper money. In England a farmer pays a very low rate of interest on the value of his farm and buildings in the shape of rent, and he loses nothing by depreciation in the'value of laud. In New ■ Zealand the farmer pays very high rents on land in the shape of interest and mortgage expenses, and if there is any depreciation in the value of land he is the sufferer. In England the landlord is insured against bad seasons and bad prices by the tenants* capital—in New Zealand the moneylenders are secured not only against the loss Of their interest owing to bad prices and bad seasons, but against the depreciation of value in land by the mortgagors’ share in the value of it. In England landowners have been content with to 3 per cent, interest on the value of their land in rent

—in Now Zealand mortgagees and tbeir agents rackrent the land by high rates of interest, commission fees and mortgagee’s expenses, costing together from to 15 per cent, and upwards per annum. There can be no doubt that Protection would increase and improve the home markets of the colony for all kinds of farm produce. But as Mr Twomoy’s programme points out, reducing the rates of interest ‘on mortgage would not only benefit farmers, and the rest of the colony indirectly through them, but it would make peop'e invest mote money in manufacturing industries, While people can gel 6,7, or 8 per cent, on mortgage they don’t trouble about industries. In the same way people will not emigrate to New Zealand, from England if they can sit at home and draw dividends of 10 and 20 per cent, through the companies and lawyers of New Zealand out of the colonists, And as the money-'ending ring of New Zealand inow rules tho rates of interest in the colony, it seems not unlikely that in case of (any increase in the Property Tax upon them they will make tho rabrigagors pay ijt by increasing the rates of interest, as they have done before 1 And there is nothing

that I can see except the establishment of a State Bank that could prevent the banks from doubling their “ exchange tax ” on cheques. I think that the chief reajaon for Protection, as for a State Bank, is shat which you have given, namely—That wo have four millions a year for interest and

about seven mil ions a year for imports to pay away out of the colony, and that we have only about seven millions value of exports with which to pay it. This means that we import four millions value more than we can pay for, and therefore at this rate our debts increase four miliioiip a year—and the pace increases, I do not give the Government any credit for their proposed tariff, because both Sir Julius Vogel and Sir Robert Stout profess themselves to be neither Protectionists or Freetraders, and because I believe that their 6nly object is, as they have said, “to increase the fivonae.” They want to increase the revenil se that they may keep in office, and make our credk good on the Stock Exchange. Jii’ius Vogel and Sir Robert Stout pro'esa to be willing to answer questions, but ihey wilfully evade the subject of a State Bank, and they do not accept the challenges made to them on the question. In their right of note issue the Government of New Zealand give the equivalent of a loan to the banks, the amount cf which is

only limited by a condition that they have a certain proportion of gold la their hands, which gold, however, may all really belong to their clients, or in great part to the Government itself. (W here is the £2,000,000' Government Savings Banka deposits?) Except about two millions of gold all the rest of the banks’ capital consists of promissory rotes, securities, and other property. , It is undeniable that a State Bank having as ranch gold, or half as much gold, as all the other banks have, would bo in as strong a position as all the other banks put together. These-facts are so cleat 1 that no one need wonder at the money-lending fraternity not attemptng td refute them. Silence is their only defence, and it is a slrong one, for it is not easy to get the people to study such a question as that of a State B mk. The odd million of note issue brings in a profit of £20,000 a yeur to Government, but if there were a Bank the Government could g p t 4or 5 per cent, interest on nmiy millions, by adding the farmers land to its assets, and giving bank credit to half or two-thirds the falue of the lands.

Both parties are advocating retrenchment and moan borrowing, but they both seam., to belong to an Association of the and Dumb, of which tc-day’s LytteltoA Times makes mention, "the members of " which show th-maelves deaf to reason, and unable to address public audiences” as regards the way in which our Colonial balance-sheet is to be settled, and as regirds ti e very great State Bank question. According to Mr Fisher, the public debt of. the colony increased from March 31st, 1883, to March 31st, 1887, by no less tha*

seven and a quarter millions, and our Colonial assets have diminished by the giving away of two and a-hnlf or three millions of acres to the Midland Railway Company, and the private indebtedness of the colony has no doubt increased at the same rate. It takes at the present time £150,000 more than all the year’s revenue derived from the Customs duties and Property Tax to pay interest on our public debt. [See Fisher's speech, Hansard, May 25th.] In conclusion I bejsf to congratulate Mr Tw omey heartily on his speech at Terauka, and on its success, and I trust it will have the effect of rousing the public from their lethargy. It will be a disgrace to the people of New Zealand if they allow their children’s inheritance to be squandered an ay as is now being done. John Miles Verrall. O.hoka, July 21st, 1887.