THE GOVERNMENT POLICY.

Temuka Leader, Issue 2570, 19 October 1893, Page 4

THE GOVERNMENT POLICY.

STATE BANK. (Correspondent of Otago Daily Times.) This coming from the Premier when on the platform is in itself full of significance, but, in conjunction with ascertained facta and various signs that have come to me during the past few weeks, nieans, I venture to think, a desire and intention on the part of the Ministry, if returned to power, to associate their projected land settlement schemes with a national paper currency and a State land mortgage bank. Strange as it will appear to your readers, the statute authority for the paper currency is already in existence. Early in the session I drew attention to the last clauses of the Post Office Acts Amendment Act, and indicated the significance of the provision dealing with the note currency. It is illustrative of the attention that is given by hon. members to the bills that come before them, that this measure has passed both Houses without its real meaning apparently being discerned. As a matter of fact, it may almost fairly be styled a State bank in disguise, inasmuch as it repeals the form of the postal notes prescribed by “ The Post Office Act, 1885,” as in the schedule, and directs that it may be in such form as the Governor by Order-in-Council may, from time to time prescribe. Here are the clauses in full: “8. ‘ The Post Office (Postal Notes) Act 1885’ is hereby amended as follows: —(1) In section 3 thereof, the words ‘in the form set forth in the schedule to this act ’ shall be repealed, and the words ‘ in such form as the Governor by Order-in-Council may from time to time prescribe ’ shall be substituted in lieu thereof. (2) The schedule to that act is hereby repealed, and section 3 of * The Post Office Act Amendment Act 1891 ’ is hereby amended by the insertion in the second paragraph of the said section after the words ‘ the currency of all postal notes ’ of the words, ‘ other than £1 notes and £5 notes,’ ” To make the meaning clear I should add that the Amendment Act of 1891 provides that the currency of all postal notes issued under that act or the act of 1885 shall be extended to 12 months from the date of issue, and said acts and all regulations made thereunder, shall bo read and construed accordingly. It will thus be seen that under the sections of the act of last session, £5 and £1 notes are excepted from the limitations of currency provided by previous legislation, and that such notes may be issued “in such form as the Governor, by Order-in-Council, may from time to time prescribe.” This means that the Government may issue a legal tender paper currency at any time, and profit by all the advantages of that aspect of banking business to the extent of its note circulation. As to their means of obtaining business it is obvious that the civil service and Government contracts alone present more facilities for procuring a State bank note circulation than any at the command of an ordinary banking company; while for security it would have first the automatic gold base represented by Savings Bank deposits, and the impregnable collateral security of the State guarantee. My belief is that the Treasurer, being thoroughly alive to the sensitive nature of the banking business of the time, will be most careful to avoid any developments under his innocentlooking bill that will have even the semblance of competition. But I am equally confident that when the present financial tension shall have passed away, assuming he is returned to power, the small beginning will expand to a policy of great magnitude and of the highest importance to the State. Meanwhile a beginning may be made, and the public gradually educated to the scope and meaning of the new project by an issue of Government bank notes to civil servants and co-operative laborers resident in those parts of the country where the banks have not established local offices, or where they are not easily accessible. This would not directly clash with the banks, and would be a great convenience to that section of the community requiring ready money on the spot. The Hod. Mr Ward will be heard from again.

A LAND MORTGAGE BANK. The Premier’s declaration at Feilding that “ power should be taken to give advances to lessees from the Government, who should lower the rate of interest, which would be in the interests of the people,” is the first note, I believe, of the establishment of a land mortgage bank, the object of which will be to assist com- . petent settlers upon conditionally acquired Grown lauds to improve their holdings. It will probably be found that this is but part of a very large reform in the policy of land settlement that the Government intend to yet place before the country which could work in this way : Give an intending settler with, say, £l5O capital who can procure under lease in perpetuity 200 acres of suitable land valued at £2 per acre. For this he pays £2O per annum rent to the Crown, and invests his £l5O in permanent improvements, this being done, he obtains itom the district land officer a certificate that liig estate is permanently improved to that aiaowt, With that document he is in a position negotiate with the State Land Mortgage Bank for an advance by way of mortgage for two-thirds the same (£100), leaving to the mortgagee the ordinary margin of security. For this he wolrfd pay § per cent., making his reift and interest ci. ar £ oa less than 10s per week. The £IOO in turn being similarly invested, he would be in a position to acquire a further advance of £75, and so on, and this, while being a good security to the State as landlord, would be comparatively valueless to the ordinary investor, who would, if he considers the security at all, probably feel bound to demand a rate of interest that would be prohibitive. THE RESUMPTION OF PRIVATE ESTATES. It is easy to see how completely these schemes can be made to dovetail with the fixed determination of the Minister of Lands that the constituencies shall, above all things, be asked for their mandate to the Legislature that statutory power shall bd taken to resume as required such private estates as may be deemed necessary for the settlement of the people. The bill of last session had some defects that were very lucidly indicated by Sir Robert Stout, and its fate in the Council was a foregone conclusion. The policy that will be put before the country, will, I think, be much more comprehensive than that contained in the rejected bill. It is felt that, assuming the powers of resumption are sufficiently safe guarded against any arbitrary action by the Government of the day to satisfy the most timid Conservative, there is behind the larger real difficulty of commanding sufficient capital to acquire suitable land with sufficient rapidity. Discussing this aspect of the question with a prominent Liberal leader lately, I suggested that a method might be devised to finance such purchases outside the consolidated account, paying interest from out of the accruing rents which would be credited to that special account. I was met by the rejoinder that the experience of the past was that special accounts, no matter how safe-guarded, when in credit had not been secure from the attacks of a Treasurer with a deficit. This, too, has been withmy ow» knowledge the oaae

in some of the other colonies; yet I think an attempt will be made by the present Ministry to grapple with it, and the last experience of the Sydney Government will furnish the example. In speaking on the Public Debt and Sinking Fund Bill, the introduction of which has been received with the greatest favor in London, Sir George Dibbs said they would take out the working expenses and would pay the interest by placing- it periodically in thq hands of commissioners tobe namCd—men of the highest position in the Old Country as well as this, —who should be a buffer between the colony and the borrower, and who would be a guarantee to the lenders that their annual income would be paid with unfailing regularity during the currency of the loan. It may then happen that the bill to be introduced by the Seddon Government, if returned to power with a sufficient majority, will contain provisions to borrow moneys as required for the special purpose through independent trustees in Loudon-—the Agent- General representing the colony at the board. Thus controlled the account would be beyond the control of the most reckless and unscrupulous Treasurer, capital could be acquired as needed, and the purchase would become a first security to the lender, who, having the “ collateral” of the State guarantee, would advance at a correspondingly low rate of interest. More than this, the difference between the income from the laud at 5 per cent., and interest upon advances would form a sinking fund that would extinguish the debt and return the land to the State. I have here indicated enough of a large policy for one day. That it will be thus formulated lam not prepared to say. That it is contemplated upon some such lines 1 have reason to suppose, and it is of sufficient importance to deal with at some length. Whatever the sins of the Seddon Government, its most bitter opponents, 1 think, have to recognise the sincerity of the aspirations and honesty of purpose of the Minister of Lands in his desire to plant small men upon, the land. That he is a man of large views in this direction I know, and that he will have the courage to voice them at the proper time I do not doubt.