THE Wairarapa Mercury. MONDAY, OCTOBER 21, 1867. GENEROUS BUT NOT JUST.

Wairarapa Standard, Volume I, Issue 42, 21 October 1867, Page 2

THE Wairarapa Mercury. MONDAY, OCTOBER 21, 1867. GENEROUS BUT NOT JUST.

Though Mr McCulloch has asserted that it is impossible to form estimates before hand of what may be the effect of any given financial operation, the financers of New Zealand constitute an exception to the rule. From the days of Reader Wood to those of Julius Vogel estimates of the kind have been frequently formed, butthey have quite asffequenly proved fallacious. With the sole exception of Mr John Johnston there is not at present a member of either House who knew a few years ago anything whatever about finance and financial operations, and the knowledge they have since acquired has been gathered in the schools in which politicians as well as fools are taught wisdom. It would appear, however, that the experience which teaches so effectually must be that with which we have ourselves become practically conversant, and not that which we could if we would obtain from others, or we should have certainly avoided committing similar financial errors to those which have in other countries proved so injurious and misohievious. In New Zealand as in England we have hound ourselves to pay hundreds of thousands of pounds, principal and interest, which we have never borrowed, and which consequently we have never had the use of, through offering a lower rate of interest than that for which the full amount of the required loan, could be obtained. In England, according , to,*MeCulloch, the immense and’ apparently' interminable sacrifice of millions; a-yqar

is entailed on the public through the ignorance ■'ahcl errors of succeeding ministries and parliaments; and iu New Zealand notwithstanding the lesson taught by England, similar evils aro being fostered by similar causes. On the Three Million Loan alone we aro paying the interest and the sinking fund on two hundred and sixty thousand pounds which we have never received; and Parliament on the eve of its prorogation, generously resolved to do the same thing with regard to the loans obtained by the Province?. They are going to make a similar.' or..a larger present to the Provincial bond-holders,' not to induce them, as 1 in the former case, to advance their money, but because we desire to give them a better security for the money they have advanced than they at present possess. They lent £BO or £OO on a £IOO debenture, because the security was not sufficient to justify them lending the full amount, and Parliament increases the security by backing the bill, and allows'the lender, and not tlie borrower or the endorser to pocket the difference. Parliament in doing this may have been very generous to the bond-holders but it has not been very just to the colony. As Mr John Johnston was, as wehavo said, the only person whose opinion on financial questions was in former times worthy of weight, we have been at some pains to discover in the voluminious pages of “ Hansard ” what he had to say on this subject, and we find ho stated that if the colony assumed the risk and responsibility of the Provincial loans, the colony ought at least to get theprofit derived from the use of its name in the transaction. This profit he estimated at £BOO,OOO. The General Assembly, however, determined that the debenture holders and not the colony should bo presented with this large sum, and as the Bank of New Zealand held some £400,000 worth of debentures the shareholders of that Bank will participate in the spoils, and hence probably the reason why so few members of the House objected to the monstrous arrangement. There must have been a large number of members who were directly personally, and pecuniarily interested in the vote they gave on the occasion, and we are surprised therefore that they were permitted to vote at all. In our last issue we gave a brief report of the speech made by Dr.Featherstou on the second reading of the Public Debts Bill and we can do nothing better than give tho speech from “ Hansard ” which we made against its third reading, from which it will be seen that he characterized the bill as a gross fraud and gigantic swindle. He said :

Sir, I rise to intimate that 1 shall divide the House against the third reading of this Bill, in order to enable myself and those who agree with me, to have our votes recorded in the journals. The more maturely I consider it, ■the more opposed to all sound principles of finance; the more unprincipled, the more disastrous to the best interests of the Colony, it appears, to me. It professes to he a Bill for the consolidation and conversion of provincial loans, but I venture to predict that ■■under this, scheme as at present proposed, no consolidation or conversion of loans for the benefit of the Colony, but it is a consolidation for the benefit of persons who are holders of provincial securities, for the benefit of shareholders of the Bank of New Zealand, for the benefit of those who have already sent private telegrams to their agents at home, to buy up the debentures at a discount, with the object of making a large profit out of the transaction. I object to the scheme, because it affixes to provincial securities the guarantee of the Colony, and gives its endorsement to provincial paper, before that paper as been converted into colonial stock. I object to it for two other reasons; “ first because the Government will have enchanced the value of paper in the hands of private individuals without giving any equivalent to the Colony; and secondly, that if it passes it will still have left tliat variety of paper in the market which perplexes the capitalist, and raises in his mind that sort of doubt which is represented by so much per cent.” For these reasons I object to the third reading of this Bill, and I feel that, these reasons will have considerable weight with the House, when I say they are prccitely the same as were urged against the present scheme by my honorable friend the Colonial Treasurer in his financial statement; in fact I have quoted the verywords of the Colonial Treasurer. I say for the last time I protest against this Bill, as committing a robbery, for it is nothing more or less—as robbing the Colony of two three or four hundred thousand pounds—as committing upon it a gross fraud and a gigantic swindle.

We do not remember ever havingseen any measure so strongly denounced, and we certainly never heard a measure that was strongly denounced so feebly supported as the one to which we are referring. It was not the weight of tho arguments which caused the measure to be carried by the votes of 37 against 12. What other weight was it, then, which brought about this result I The answer to this question may suggest another of more importance than may be at first imagined. What becomes of our boasted representative institutions if a banking corporation, in which the people are not represented, is practically more powerful than the Government itself—that while tho latter is supposed to govern the country a banking corporation is able to control the Government —and when a large number .of the members of the House of .Representatives are more personally interested in the success of such a corporation then they are in the financial prosperity'of the colony. The. opposition of the people of America to the United States Bank was not withoutreason, and the time may come when I 4 v - L..- ' $ f r-a‘. v t •;

the people of New Zealand may have as good grounds for objecting to the political influence exercised bj a similar institution here.