INDUSTRIAL DEVELOPMENT.

Temuka Leader, Issue 1615, 2 August 1887, Page 2

INDUSTRIAL DEVELOPMENT.

The following letters in reference to this subject have passed between the Hon. Sir Julius Yogel and Mr

J. M. Twomey:— "July 20th, 1887. "Hon. Sir Julius Yogel, Christchurch. " Deab Sib, — Encouraged by a very kind and flattering letter I have received from the.Hon.,Sir Eobert Stout in reference to the enclosed address to the electorsTof Gladstone,

I take the liberty of forwarding it to you in the hope that you will kindly give me your opinion with, regard to the matter therein contained.}

" Yours truly, "J. M.;TWQMEY." " Qhristchurch, 25th 'J Dear Mr Twomey—

'.' I, am. obliged to you for the paper you have kindly sent to me containing a series of articles' addressed to the electors of Gladstone,.. I also read your speech. You. are good enough to ask my opinion of the views you have expressed. I cannot pretend that I have yet studied, them sufficiently qualify me to'closely criticise them,., bat there is no doubt you have collected a great mass of useful information, and your; writings and speech disclose strong, vigorous thought and much originality. I cannot help congratulating you on the ability you display, and hope you will continue to give your attention to the same class of questions, for they are of urgent importance, and they are not of a nature to attract many persons' attention.- I need scarcely say that I heartily concur in the necessity of encouraging local industries. •• I think you over estimate the amount of interest payable yearly, whilst of what is payable only a portion is due by the State—the Government —the remainder is composed of debts between individuals. I am endeavoring, to arrive at an accurate conclusion on the subject. It is not easy to do so for many reasons, especially because the balance of trade is somewhat concealed by the movements of capital which are open to the financial establishments because of the many colonies in which they do business. The losses - and , profits in..." imports and exports (over shipping values) are an important element. As far as Government loans are concerned, it appears that the difference between" ; the loans from the beginning '"todand the sinking fund; paidvvis about fifteen millions. The nominal value of imports over exports from the beginning is forty, millions,, of which we may suppose fifteen millions represent the balance, of., loan money referred to. I incline to think that immigrants brought out very large sums in cash. Also annually considerable amounts are'' invested! in the colony. ■■';,'..;'' "I mention these fragments 1 of information as they may be suggestive in the further pursuit of the difficult questions to which you are devoting so much thought. " You will oblige me by letting me have any further papers on the same subject.

" I am sincerely yours, "Julius Vogel." "ITemuka, July 28th, 1887. " Hon. Sir Julius Vogel. "Deae Sib, —I am extremely obliged to you for your kind and courteous letter. If, as you say, I have succeeded in directing your, attention to the problem discussed in my address, \ and i£ you have set before yourself the task of unravelling it, I feel the result of your deliberations will be that the colony will have correct and definite information 'as regards its financial position. There is no otter man in the colony so capable of arriving at an accurate conclusion on the subject as yourself; there is no one whose knowledge is so wide, and whose sources of information are so copious, and if I have been th« humble instrument of setting you thinking on these matters I shall have rendered a service to the colony beside which my election or defeat for Gladstone will be of very little • importance. Of course you will at once realise that I had no source of information .open to me other than the Financial Statement and the N.Z. Statistics, but owing, to the position you occupy you have placed within your reach thenecessary information for arriving at an accurate conclusion. In discussing the matter I hope that without accusing me of presumption you will allow me to suggest to you the desirability of keeping tha following objects always in view:— " Ist—That trade between countries is exactly similar toi ;traidj3 between individuals, being only; an exchange of goods,, and that gold, is, only employed to. facilitate transactions. • "2nd—That a country has no means of paying its ■ liabilities in, foreign countries except:with its exports. It is no use to take any account .of money brought in*o the country by immi-v grants, as that is taken away>agaiD emigrants.

"" 3rd~That as we know our exports have not Hitherto paid for our imports, and we have furtrufrmore. to pay. a large sum ; annually in foreign countries in the shape o£ interest, must therefore be - going to the T bad. The great question is, thore- _ fore, How much ; inoney have we to pay annually in foreign countries ? and in discussing this cognisance must be taken' of interest on public and private debts, dividends paid to the foreign shareholders of our monetary institutions, and the incomes

v eent abroad to absentees. It is no use f separating these matters. For instance, let us suppose that a farmer's annual share of the interest payable on our National debt is £1 ; his share of the interest on the foreign debt of the local body in his own locality is, say, 2s, and he has in additioa to pay £lO to an English money-lender from whom he has borrowed money. All this must come out of his farm, and so must everything else come out of the soil. There ia no use therefore in separating public and private in* debtedness in discussing this matter. In a Financial Statement the two liabilities should be kept separate, but in discussing the colony's monetary transactions with foreign countries both are to be taken together. «< 4th—Having ascertained the exact Bum that goes away annually in interest, etc., that amount must be added to the value of our imports, and thus we are giren the total sum we require to pay in foreign countries. We have nothing but our exports to pay this with, and the difference between the value of our exports and the sum we have to pay to foreign countries is the amount we are going to the bad, and the indebtedness of the colony must be increasing annually at that rate. " sth—Either banks, or landowners, or soniebody must borrow the deficit in our foreign account, and it is bad ' economy to buy imports with bor-. rowed money. Goods bought with borrowed money will become tremen- •■• dously dear before future generations have paid principal and interest. 6th—lmports are not wealth, as some think, except such imports as \ :, are used in increasing production. ■ Machinery and agricultural imple--1 ments are wealth, but whiskey, spirits, and all such things are not. . 7th-—To purchase with borrowed ?. money in foreign countries goods which '? will reproduce may be good economy, * but nothing could be so disastrous as to borrow in order to buy goods which perish, and which could be manufactured in the colony. "You will see from this I hope the , , drift qf my argument. , It may be summed up in a few words. "We cannot afford to buy goods in foreign countries except to the extent of the balance of the value of our # exports which.remains after paying interest, etc. it is not a question of whether Preetrade is right or Protection wrong so far as I have discussed the question; It is a question of preserving the national honor from the stigma : of bankruptcy, and also of averting a calamity which would bring incon- : 'ceivable misery in its tram. As soon as ,the elections are over I sh»ll be extremely glad if you will be kind enough to supply me with certain information necessary for me to inquire further into the question. Meantime allow me to thank you again for your kind letter.

" Youra truly, "J. M. Twomet."