FINANCE.

Dominion, Volume 2, Issue 497, 3 May 1909, Page 8

FINANCE.

REPLY TO ADVERSE CRITICISM. ,The financial year which has just closed :■■ ; v.'i: ' has boon one-of the: heaviest and m soma -.;,;!' .' respects' the most' important in the. history. tho Dominion. • In view of tho unsatis- • factory results that,cabled advico:-gives conv/'• corning ether. countries, naturally, thero is' '■nr. . very- keen interest taken in (the of • v -tho financial year -just ended, and :,L am glad: jiriteS®to;ssay that notwithstanding tho -tightness v;that"has <existed ;in -the money- market, r of: Now Zoaland for. some time on/finances, are exceedingly. satisfactory. It will be doubt.less i within .the. recollection \of many people in; different .parts, of' tho Dominion that for some months thero was a steady rflow of ad- . vprso criticism'against mo for what'my opponents deemed my optimistic -views. regaruv.:'r,i. mg: the prospcota of tho oountry's finances, ;-:' : "!-;. : '.:.-and more than onco I was .taken to task in • : • that respect. - '.As showing the. desire'of our l opponents to try and. predict -. that . .things .. , uro really worse than. they , aro, wo have an -■!<■,::■■" instance - only to-day whero .tho; Opposition v;. organ' in Wellington ' States:/ (fin 1908 .there ■ • - was a surplus,,of 'revenuo over expenditure v' in tho March (juarter of over £400,000.. Has ••••:• this been roabsed in 1909P 'We think- not. . , 'Eyen if the. revenue held its own, which is Tv'.v: , --ropen to doubt, 'the expenditure is certain, to ) havo /exceeded that of the corresponding 'year//: What that expenditure -has !been Sir- Joseph Ward will nmake known this evening.". The'position is. -that,\the expenditure did not exceed . that of-i.the.■corresponding.'quarter.:of the previous year, 1908 being £2,337,352, and 1909 f £2,333)577, which is nearly £4000 less er- :, v' ■ '.penditure, and* the. opinion expressed -that, lif would bo ! fifoVo is wrong. 11 "'• , ...Results of the Financial Year. Now, however, I propose to place the actual results before you for : the financial year just ended.- I estimated in ■:; tho Financial Statement submittal to Parliav. ment-the.revenue.at .£8,935,000.and -the,ex-! ■;■:■>>■m.v:ppenditure at■■■ £8;878,346.'.-.■■■'.■-After- bringing , ' •/ forward tho available balanoo of the previous . ' year. of : £767,849,, and .transferring. £800,000 v'v -' 1 v: out of to the Publio Works Account, . .-I-estimated, the' surplus' at £74,503, and in. v-i view of tho continued attacks made upon mo v: at; various . times during. the year as to: the correctness of my judgment, I am. not un-naturally,.-more tbanordinanly-grawfiod-to •be able to tell.you that.an analysis : of. tho figures showsthoeurplus for,the. year to be f..:.; £184,321. ' That. is. -£109,118 more than I' ■ i.,. cstimatod-, in - tho, Budget. . (Applause.) I i notice recontly that tho Leader of the,' Op-' -r., 1 - , . poartkm predicted m' the north that tho_ sur- •' ; ..plus would be under £200,000. It is singu-: ■■{■ r-Ti'--:-'rx larlv funny to find, in view, of..the/fact that ? ■; in, tho Financial. Statement I. set - the' Burjjlus. ;.f. . - :d<)wn at £74,503, : ' Mr.: Hassoy, -aftor the close :' V:; ..:..of-the year,, should'in' this. ; matter assume • '-•••. the role of ; a prophet, when;anyone who turns to, the Financial Statement' will find tho • amount I have stated is . correct,'and a furg;fJ,= ther -featore.^of .it »is!tMt;the;,surplus exceeded tho estimate given by mo by £109,118. It has been my part upon more v■■ than one.occasion .to direct attention to tho. /wonderful resourcefulness: of the Dominion. Tho revenue for- last-- year ,'amounted;:to £9,001^85,'.in. increase; of-.£l6,lßs'.over..the ; \ estimate, ..which was £8,986,000.' Comparing' f .' -She revenue with that of the previous year, ;^'^.shOTo;&:'ohl^atdecrease/i^.'^ on:>:the' v-;total Receipts.; .Tho previous year the re-. ■; .;■• vemuo was ■■ £9,055,946, as against £9,001,185 Wff- 'S'® for 1 the.year'just closed. : ;yThe^revenue forthe' nts-'i-'i 'year oxceeded'-the expenditure by £215,672, ; • the expenditure - amounting :to: £8,785,513,. which, if you deduct' from the- actual . Te-. ;;;; i: ■. venue £9,001,185,' you will find leaves .an excess of revenuo of £215,673. Heads of Revenue. ' • ' Dealing with tho various heads of revenuo, •• • .. tho railways contributed £2,918,507; as ;;;.'-;'.:;..:':- : :againEt : an ; - estimate *of £2,835,000, and- ; 'an ~0.- '- actual receipts of £2,765,395.in'1907-08, tho ' v-Tccoipts-being : better , than' the j.cstimate by. £83,607,. and an increaso on . tho! previous. ¥■: :-v.: - year-of £153,112. ; -The, railway retttrns keep up remarkably -Well,, as 'it must be borne - in mind that reductiona in - fares and ; freights havo been made to tho extent of £950,000. (Applause.) Stamps last year brought in £1,591,358, or ; /;. • • ;£18,328 bettor than.tho estimat?, ana an! in;. ■ crease of -£40,39-1 on the provioua year's re- ' ' ceipts of £1,950,134 , Th 6 returns from the land and income tax .'; readied £920,000,';th0 exact'■ figures' being; dr-fcis.-jwlind -tax.'£6ol,9ol',' income'tax £321,044, or, -£45j945 in oxcess of the estimate, and £83,194 .. better than that of 1907-08. ! i';.."..''!..-. Miscellaneous: responsible.for ;«vii V estimate by £25,210, the ; amount:received■'-'being £264,210. as 'against "W an cstimato of £239,000, and £45,868 in ox- .. - • * .' cess of the'previous year's .receipts, . !!. : : '. . .Itegistritions .and ;otlier.fees show an in- '..! .; .'creaso en tho estimate !0f,£2061'.' . • .• '' . .-. Tho. Marino Dopariiment brought in £3815. (S:M;-?; more than anticipated. . 'V.;j J ! .V ; . The Cu.sioln3.dld not.come up to tho estiK 1 " Dwfe.! by. tho. sum- of £148,752, - tho total amount for the year being £2,801,248,; as . ' '. against an estimato of '£2,950,000. In my •.'. \ opinion tho reasons for this are:-. -!' : '.-;(l) Offing to tho unexpected falling off in . .. import-values for t-ho.year 1909, as compared with a steady. increaso. for; some years pre- • ' . vious, the values of tho imports in '1907 were £15,353,127, in IDOB £18,193,808, in -:; : V' ;!!;1009! £16,750,065. Hiis falling . off 'is no ; - doubt in sympathy wjth tho decrease! in tho . valiio of. exports, which for the same .three . years were; £19,'531,614, .£17,868,030,' •! and . . £17,029,531 respectively. _ . ' . . ' (2) From excessivo importation during tho --'Q'. year 1903 in anticipation of the coming into i'v!;. 1 .;,... of .the* extended preferential tariff, which took offect on March 31 of that year. ; ' ; :i; I may say tliattlio dccjjaso is mainly on articles of general merchSndiso liable _to ad i'... valorem dutios. Tlioso articlos, which may . ' - bo regarded as luxuries, such as spints, i: :! cigars, cigarettes,_ tobacco, wino,: ale, and -y . beer show littlo ditferenco. : • - : : !':!; l/r .'X:.: There' s-as' a slight falling off in beer. dutv : - : of £786, and-thero was also a drop m terntorial revenue of £13,133, under the head of pastoral rent. < - .

Falling Off In Revenuo. f As far as I have been ablo'W see, there j has been a considerable falling off m revenuo . ; ; in almost all the more important countries, p, during the past financial year, and it should V" not'be a in.view.of what has taken • placo. in many-other countnes to an enormous extent, proportionately, by comparison with,-New;-Zealand, that /our. revenue 'Should • b0.£54,761. bolow what it was the. previous year, a fall m our. revenue which was prej dieted-by me m our last Budget; but . a 6 gratifying feature, of this is that our revenue - .was, .higher than our expenditure by . over j £215,00. '.fho revenuo receipts for tho. past -five years have boon as follow:— a 1901-05 £7,282,870 a 1905-06 ... ... .„ £7,584,359 0 1906-07 £8,399,075 1907-08 £9,055,946 y 1908 09 £9,001,185 v It must not bo forgotten that.'in comparing 'the .-figures "of' the "financial year /just ended " the rovcnue, as a' matter of policy, has been largely reduced during the last fow years by ;the remission , of Customs 'duties,'', railway; ; ; ; ' concessions,'' the r abolition; of.'the sheep; tax, /; ' and ' the transfer of , la-rige' areas . of Crown ;. lands of national' endowments,..but' notwith-' 1 standing .all. this,tho revenue for tho last 1 year just;,closed;.;is.£6oo,ooo better tlian for , tho year 1906-07, and 1 am certain-it ivill. /.■ not bo considered, egotistical on my part if I; drawr/attention>to; : tho fact that the rovenuo' haa' increased' during the three.. years : ?/. of -the .Ward Administration by tho sum of £1,416,626. . (Applause.) A calm renew of ' tho position of the' revenue for the last year . by; anyorio professing' a ; of publio 1 fmance, by anyono realising the causes -which i : led -up to. a tightening of tho funds of- the private individual and the financial instdtu- ® tions in tins conntiy ~dniing;'the';year( just S' closed-ra calm review, I of the posifi .tion in respect, to*the results or 'the revenue' ". under .all .thoseicircumstances must not only !. bo^gratifpngj/but-'dibuld;havo a reassuring ' effect, and it ought to impress the timid or ' .the .'pessimistie in our midst, to say : the least " of it, favourably, inasmuch as if one had been mclined'.at critical 'periods,some 'months ago, : to bo. nervous,, there. were sufficient;croakers about to make;one feol so.- , l . .. I wish-.noW".to deal with the expenditure ' of tho"-Con^iiliaated ; 'Funda. The estimated expenditure vl ..gave;- to the House for the year was £8,876,346, :to which must be added the railway surplus .revenue, £83,507, which by tho; Public..llevenUes Aot, is-treated a3 an. additional appropriation. Tho actual ox- , pendituro, I have ' already >• stated,';' , was £8,785,513. A saving on • tho ; votes of £176,340 . was -oitectod, tho utmost economy , having bren exercised durmg tho year. Had . it ii'ot bebn for the..surplus;railway rrevenuo,. it is ./orily iairifor' me/to'.point" out 'that the' ) unexpended;, a i ppr9priations would be £92,833, I but; the. atnount of tho snrphis railway ret, satisfactoiy. fea, - ture'- ; --bf ,r tho"?ye» s 4 ll >'traflsactions . ;is .that' £800,000 was. transferred from ordinary revenue, and paid into tho Publio Works Fund . m. aid; of public worjes. In othor wordsj if this,.£Boo,ooo .had Hot been transferred ■ and • used for the carrying on of publio works, ; the ; balance : 'of-. .the revenue'.-at" the" end' of the year - would have been '£984,321, but 'after, paying -the £800,000 into the' Public' .Works Fund, we carry forward £184,321, and regarded , as 'exceedingly . satisiactory. , .(Applause.) - When the Ward ;., Administration'■ took office,'the floating debt of the Dominion was £700,000; and it had - really" come, to ;'be regarded as/part of tho . permanent debt. During the year , just ended 1 have been ablo to .rednco this' amount by ; a further ■- £150,000;' and having, during the , two? former years paid off £300,000, there . has been no less . a sum than £450,000 1 of this amount paid; off. since the .Ward Gov.- , orament took office. In other words, our indebtedness,, in. threo years, has been re- ". duced, by; the large sum of. £450,000,' so that ■ the.:: amount, 'iiowp.'.' outstanding .- is only £250,000, -;as compared with £700,000' three : years .ago.-,(Applauso.j Loans. , I DOW: wish ■ to.. say something regarding I the renewals and the floating of loans.' Tho task;;of , procuring, -iqans: has 1 -', necessarily'" always been a.' delicate and very responsible one. .. These important matters have all been: arranged for woll ahead within " the ■ period, of the present Government's tenure of, office.;" .Nearly v £8,000,000 . of. ;■ debentures .have;'had;-.to -'be ; renewed .'or; otherwise pro-' •Tided, forj > and the. whole of this last, year has been.'successfully dealt with. In a'ddi- • tion to the 'amount .named/ fiirther loans, ;. to tho extent of £2,013,399, ■ falling .due during' the-current linancial year, h[Lve pract-ic- - ally all been satisfactorily-provided for. / The -. amount which fell duo and -was provided ; for.-during'..the; past year was £3,133,238. The ; greater portions of the loans I am. reforring to were renowed for a longer term at ; tho samo rato, so I think; tho country ;; can; congratulate itself upon the 1 very' suc-cessful-operations, that have been'carried out in,thiß respecrt.' '-In'addition tho/authorities Already giVen,''Parliament' has authorised .■ the,,raising -of; £1,250,000 for publio. works, and" £1,000,000 for the, acquisition of the Weir lington.,and Mariawatu' railway; and . it may como as a; surprise to most people to know - that practically tho • whole of this .large, amount of money was raised in London on the I most favourable terms, and with a.minimum : of cost to tho Dominion. In addition to , this:l,;as Minister for Finance, had ,to:pro- ; ■ vido for,other monevs for advances to settlors ; .and lands'.for settlement without.'trenching ] on -local resources : in the Dominion itself. ; 'Din amount of money borrowed from the '■ publio was loss than £100,000, - .and this r - amount was taken up in the Dominion un- ' solicited. ; On the other hand a, much larger' j, sum has. been paid off in this country for the redemption of bonds' falling due. Only ■ tho other.day. a parcol of £250,000 fell duo, , of which £210,000 was paid :off in cash in l the ; Dominion .and £40,000 renewed - for a further, term. - (Applauso.) Loans for Local Bodios. Applications fromMociJ bodios for loans for 5, roads and bridges havo been much larger ; .than usual during tho past year. -: This is no - doubt due to the: difficulty Iocs!-'authorities 1 find in obtaining money at;a reasonable rate s of 'intorest within; ; the Dominion. Tho y amount of debentures authorised by law for ■' this purpose,, £250,000 per annum, was a croated :and issuod during tho year, of which 1 amount £192,136 was paid over in grants to - local bodios, and £54,713 for tho oponmg up 7 of . roads and Crown, lands. _ During tho year n £372,000,'ha5; been spent in the acquisition o of,': land/for' settlement. . Apart from ,;tho o :'that I: havo' given 'ybui'i 0 duribg "the .twelve. months. ended : March .31, i 1 19Q9, £1.403,835 12s. has beon advanced in ! the Settlers' Department, and £253,185 ss. o in tho Advance's to Workers' Department; 0 and/the'total, ,£1,793,019 18s., actually paid out during-.tho financial year was a record •. for tho Department, tho mcreaso on the prei- vioua year s figures-being £39P,535.. These d figures show that there has been a continuous y incroasfl'iri'tha',number of. applicants for ad--1 vanoes, and tho oflico is .doing its.: utmost to d mcot the rcqnircmants of borrowers with .: the funds' at its disposal. In tho face of V. the, figures' I have 1 , jilst given, how absolutely [. ridiculous is. the statement which has , been if mado by those who havo been pm-pricking tho Government on and off during tuo yaar l

declaring that the Department hadno funds. That statement -1b absolutely.; incorrect,', as tho largo amount of advances actually paid over each month shows that up to last month (March) that;a full average has been maintained throughout. Over £5,000,000 has been raised;by the Government for investment on mortgage to March 31,: 1909, for advancos to settlers, and nearly £500,000 for advances to workers. The results of the past year ,go to show on what a solid foundation the Dominion rests, and in spit© of the stringency of the money market, there is a steadiness and general confidence which augur well for its prosperity. I want here to call attention to the amount of money obtained for the requirements of the various purposes authorised by , law;, during the financial year just closed— . , ' ' £ . s; d. Renewals ... ... ... 8,133,238 0 0 Public Works and Mana- : V. watu railway loan ... 2,250,000 0 0 Loons to local bodios ... 250,000 0 0 Lands for settlement 372,000 ' 0 0 Advances 'to,, settlers and . : j workers , ... ••• ... 1,792,019 18 0 . ; Total ;' • : 7,797,257 18 0 All -of this has been provided for irrespective of the arrangements ; made ahead: _for ,loans falling due-this-year, and as against the absolutely foundationless, yet repeatedlymade, statement that the Government was short, of money, this in itself must be regarded by any maa as a very great financial operation! 1 Yet lam sorry to have to say for a considerable: time almost daily ■ there have been incessant:, attacks niado against the statement I have more than once . publicly made affirming the financial stability of.'the country.! Pin-pricking was carried on with what appeared to be to me an utter disregard of consequences, and vv'ith very little consideration for-the men 'upon whom was N invested the enormous responsibility of having to steer the country safely through important, financial transactions. Notwithstanding the very heavy .year's financial operations that we have just passed through successfully,.on March.3l, the end of .the; financial year, there was £715,952 cash in the public, account, Wellington, £100,810 cash in the public acoount, ' Condon, and , £341,348 casfe in other.- Government accounts, so that on that dato wo had in hand £1,218,110 in cash. I can, therefore, with somo justification. affirmthat our public finances ..were in ,a ' strong /position.", •At tho end of tho year 'the. results, show, that what. I >have stated from timo.to time during the year has been absolutely' verified in every respect by the. results/;. ' :/"; '-v • ; Reduction In Expenditure Necessary/ . . I wish now to' say that-tho expenditure under both, headings; • permanent.-' and an--1 nual appropriations, -has considerably 0 increased., The expenditure of the .Consolidated Fund revenue account for the financial year :just endedhas increased.. to /'.the . extent of £571,548, and though our actual consolidated revenue ■■;. for tho year; 'is. £215,672 above tHe amount of the increased oxponditure, still I am not- satisfied with the way, in-which our expenditure, both for permanent and annual appropriations, is mounting up. I feel that; with the. grave responsibility upon' my shoulders; that a reduction in • our annual expenditure must be ma.de, and it is for this reason.that the Government has already set ito work to make reductions in tho Public Service to the extent of at least £250,000 per annum. , I am confident that it can.be done, though necessarily/it is not. a. pleasant' task." Although ■ a .'work ■' of this kind is iimpleasant/to the. Government,we must,' in .'the; best interest'iof <the country, ,effect_ .savings'; l to/ ensure ' substantial: reduction in our . expenditure, whilo at'the same time maintaining the efficiency in; tho servico. I do not'think 'there is any cause for apprehension. ; Tlie fact that our. Customs revenue has fallen £150,000 below .tho estimate during tho - year;' and that concurrently; a large increase in the Expenditure of the Consoli- • dated . Fund has!taken .place, I. think I am right in saying that the prudent course ■ to ;tako. is. to,,see' that',our /expenditure; comes down.so as to make full provision for more thsuu thei-pjesent ...reduced amount, of; the Custom^fevtenu'e:As'' against' tho fall in* the amount in the Customs revenue which I have indicatodj. the. lossjjof .£786/ in beer;'..duty and £13,143 in- territorial revenue, 1 'the -inr creases over the estimates in the railways, stamps, land tax ."and .income tax .registration and other fees) marine, and miscellaneous -amounts to £178,866. So that there are increases : of £16,185 above those of ! the. three Department? - which ;/show - reduced amounts. .' There are unquestionably assignable, causes for. the reduction in the Customs and territorial' revenue, and there are important .Departments which show increases. The Trado Outiook. , _ I hnjro to-day received, a telegram from the Secretary of Customs informing me . that thore -is an'increase;;,of- '£9600; in . Custom's .duties .for. tho month .of April as 1 compared with., the ,-corresponding .i month;last .year; Thore-l's also, I may state, a Very much better feeling amongst commercial; men through- . out the country as to the prospects and conditions of trade. In commercial- circles -in Auckland, for' instance, last March; I have been advised, . there was a distinct improvement, and it is quite evident that . as - there are- no abnormal causes to bring- about the mcrcaso in tho Customs duties to whioh I have: alluded, Jit is a healthy sign, and ■ one which I sincorely hope, ; in the ■ interests of all, may-continue. .(Applause.) ■, Public Works Expenditure. , During the year tho'sum of £2,169,278' has been expended on publio works, as : against £1,874,438. spent in the previous year. -The principal items"of expenditure are : ;vi,: . : ;' £ •'Railway construction . ... 713,000 .. Addition, to open lines 390,000 Heads ... ... J; 469,000 Public buildings ...,' 285,000 ' , Telegraph,, extension ... 163,000 Tho'business of the Post and Telegraph Department has progressed in a most satisfactory. manner; The revenue '-increased 1 by £91,000, reaching a total of £914,000 for the . financial; year just ended. .At this' rate' of in-crease-the million should not now be far off. The expenditure amounted to £807,600,. leaving a substantial talanoe of £106,500 on the year's transactions.; ■■■; Of tho revenue, '.the Post Offioe . contributed £544,648.-.'. and : tie Telegraph .and Telephone £369,352. Postal stamp sales, ■ with £480,958,, approached closely 'to the-half a million, and exceeded all other sources of revenue combined. That reduction in rates ia followed by increased business is shown by the.fact .that,with aSO per cent, reduction in, money order commission during the' past year,'.there 'was an increase of £46,600 in orders issued. The increased work thrown upon the Department is not confined: to letters and/money orders is? sued, but affects all branches of the service. For instance, telegrams, increased jn numbor by 382,770, Savings Bank transactions 105,937, postal notes to 61,681, ' and money orders paid 33,633. ■Jt follows -that increased work , necessitates increased expenditure, and an additional £25,000 was expended on mail' services by' sea, . coach, and rail, and- £27,000 for miscellaneous ; expenses of management;.- .Notwithstanding pessimist tio reports, tho deposits during le Savings Bank year : ended' Deoember 31, .1908, amounted t0£9,674,075, an increase of £322,411 ovor 'tho previous 'year,-dndi the .total amount at credit of depositors roso from £11,523,231 'to £12,159,294.; / Thus £636,063 was added to the savings of the peoplo duriiig 1908, a very,, creditable ~; record;. Although in the September and December quarters tho withdrawals exceeded the deposits, it is a gratifying • fact that in the March quarter of this year the 'deposits were again,in. excess, and there ,is .no indica-' .tion , so. far that the . Juno quarter., will roverso this satisfactory . position. Any imputation that tho Savings Bank is boing used as a channel for investment is riot borne out by the fact that the increased amount deposited is duo to an increase of over 55,000 in tho number of transactions. Moreover, the avorago amount of each 1 deposit was 13s. 4d. less than in 1907, and the average amount at credit of each depositor is only £35 10s. lid.' .'The funds are well invested, and as a consequence £379,800 was last year distributed among Savings Bank depositors within the Dominion as interest., , A Reply to Mr. Massey. ■ In connection with tho remarks made by Mr.'.. Massey at a recent social jgathanog ■ at ! -to

finances of the Dominion, in which he referred to the policy of the Government as to the investment . of surplus Savings Bank funds, inferring -that the investment of such funds in Government securities might be objected to by depositors had they a knowledge of the fact—this argues a lack of ordinary intelligence on the part of such depositors which they by no means deserve. As a matter of fact the great body of depositors are grateful for the opportunity offered them to deposit their savings with toe Government at & rate of interest which more than favourably comparer, with the rate paid by coin- ■ mercial institutions for money lodged with them on fixed deposit. Moreover, the depositors are wise enough to know that, although Governments may come and go the credit of the Dominion is pledged for the repayment of such moneys, and they are content, to accept such assurance. > What more desirable channel .for investment can be found than the . purchase of debentures created under-authority of the peoples' representatives in Parliament assembled? (Applause.) It must not be thought that the Governmentviews with any disquietude the ebb and flow of the Savings Bonk business. - On the contrary such movements are regarded as, a natural sequenoe following the fluctuations of the money market. To show that there is no point in_Mr. Massey's. statement regarding the falling off of the Savings Bank deposits in the quarters to which he refers. I may state that-other fund institutions at, a time of-stringency raised the deposit rates. I did not follow that course as far as the Government Savings Bank deposits are concerned, as I was' of opinion it would be an unwise thing to do, and would have the effect of making money - higher . and generally throughout the country more difficult to obtain. - - ' , Mortgage Tax. , There has' been an agitation in New Zealand, particularly in Wellington.' to endeavour to have what is known as the mortgage; tax repealed, upon the ground that it' is preventing money from' ooming into ' <ew Zealand for-, investment. It is astonishing ,to -find that during the last six years, up to 1908-09, there is an increase of invost- : ment in mortgage, apart entirely from Government deposits, of £1,664,393, [or an increase of nearly 40: per cent, of capital invested upon mortgage during those years... Then again it is contended that the •Advances to Settlers Department drove.out, the mortgage, companies formerly ..operating :in New; Zealand. I,find upon examination that the total amount, of oapital withdrawn by them would amount to two millions, .and -as fast a's it was. withdrawn it was replaced •by the Advances to-. Settlers .Office, which i has invested over eight millions all told, but has aotually borrowed five millions, the repaymonts from time to time being reinvested, •bringing in an amount up to the figure I have named. I may add that .two representatives; of largo investing companies in mortgage in ' New Zealand declare the agitation for abolishing the mortgage tax or altering the assessment to income ..tax is . hindering capi-tal;-from being invested in mortgage is ridiculous, and insist that it: does nothing of the kind, and that they muoh prefer the tax remaining as it is. Both these institutions, I may Bay, have during the last few years increased- the investments on behalf of the business in. this country by nearly ; half a million.- 'The 1 real aim of tnose who suggest the abolishing of tho mortgage tax is virtually to make, an attack'on the land taxation- ' of ■ the oountry. It may not be, intended by , some of ■ the movers, but ; if the .tax were, abolished it' would mean the abolition of. the land tax upon a total valuoiof over,72 mil- 1 lions 'sterling, and the incredible fa'ots remain that -when interest .was; ruling in;. New Zealand at-4and '4}', per.cent.- large sums wero' sent -for .investment at those' rates,' and the mortgage tax .existed .at 25' per cent, 'more than it - is now, whereas to-day - invos-' tors are getting, I am sorry to say, up to 7 per -cent., and it is. foolish reasoning to bclievo that, while they did not object when therate'.'was' low, we should .'now be told thoy are doing so when the rate is'high.; In reference to money being sent out of the country, there is, I am confident, practically-Bothing in-the statement except that in a.few cases wfoeire pooplo have sold large estates in' 1 New Zealand, they have gone to another country to try to purchase largo estates there; In bur case, our land system is intended, to break up large-estates,'and it can hardly be. expected that we,are going tojchango a material, portion,of our law to provido for excoptional oases of this , kind., . Tightness of tha Money Market. ' The tightness of the money market which somo people have been so very kind as to attributo'to the Government; is not, of, course,, due to any such cause. On, the contrary, I have shown that the amount of money that the Government have brought into the country during the last year was* enormous. I have stated that wo have borrowed in New Zealand les3 than £100,000 from the public, and we have paid back to them a much larger sum than wo. have' borrowed. Nor can' the 1 amounts invested in the Post. Office; Savings Bank, which is , available for investing purposes to the whole of the community, be credited with having absorbed a large sum. As a matter of fact, £250,000 has gope to the ■ local public bodies in the matter of the: payment for the Manawatii Railway. I arranged to have .this done in London, so as not to withdraw- money ' from circulation in New Zealand. The amount of money that we have lent out through the Advances to Settlers : and, the Advances to Workers Departs | irients totals nearly- £1,800,000, and in addjf. tion to . this, two other, Government Doparil ments have advanced direct upon new morty gages a sum of . between £700,000; anq £800,000. : We, have,' therefore, lent 'oilfl through four Government Departments , ra) round figures the sum of two and a half mm lions in ' .twelve months/ Yet so porvorso is\ human nature that some of our opponents will not accept facts ' as against their theory etical assumptions and; continuous? diatribes" so long as they, are against, tho Government. The real cause of the tightness of tho money market that has occurred in New Zealand is, in my opinion, During times of unusual prosperity there was a piethora of money available at low rates of interest, which induced many people to go in for speculation m lands and -business and other investments generally. It was helped on by to - unusual high Vorioes' in our wool market, and in some of our other staple pro-: ducts. The.faU'in:the!price of wool and Anoccurring suddenly reversed ; tho position ;■ of there being an excess of money available into its -being. locked up in many , cases,, reclamations haying to be made as well as in numerous instances considerable advances being re'qnired by those! .who had. purchased land either for speculation or investment purposes,; and upon which they found they could, not,' when asked to do so; hurriedly realise/ Some people have blamed the banks, but upon examination 'into the position I do not . think there' is anything to warrant this, that is sinking-generally..' I know- nothing of individual cases, nor am I speaking in that sense., But the. fact remains that as the . result of the, change of; policy which became necessary .by these institutions a considerable amount of inconvenience undeniably occurred to many people in good positions. With the growth of business,' with the increase of - settlement, _ and with. the large areas of fresh'land being taken up throughout, the -Dominion, the, banking resources at present in- New Zealand are not sufficient for the amount of business 'that requires to bo carried on in this country. In other words we -are "underbanked," and cither those institutions carrying on this important branch of the work of .the country should largely .increase their capital and available funds, or, elso facilities snould bo given for an increase in tho number of banking institutions so as to keep pace with the expansion of business that has gone on, and'will continue to go, on throughout, the Dominion. I am of opinion, that lUTther facilities will require to be provided by legislation to -enablo the -Advanoes to .Settlers Department to meet to . a'greater extent,- than it is even now doing, the altered rendition of affairs. There is no reason why, with judicious administration; and control, its work should not bo extended to meet the new conditions which h.ave during recent times presented- themselves. Paper Currently. I am not in accord with the advooates of tho papOT 'ourrcnoy' who wish , to supersede the'present system. It would, in my opinion, bo a fatal mistako for any such course to bo followed.- A close, study of this important matter must to any impartial person dMo» t&a danger that would-follow it

any Government attempted to establish what was advocated by some people, that is, the issue of paper money. Our business is conducted upon the basis of a gold standard, and until the time arrives when the cooperation can be secured of great lending oountries —places from which the Dominion lias bo Towed largo sums of ■ money—the first consideration that must be kept before us is to ensure not only good faith'being kept by those who borrowed the money, but that no alteration- should be made in a matter so delicate-and difficult as that of , the currency of a country, which could only bo approached with the activo concurrence ' of tnoso who are bo vitally interested in' us, and we in turn are equally vitally interested in keeping the bond undertaken preserved in both' the letter and spirit of the law. Ido not say that reform in banking cannot bo adyantagepuslj; effected. ■ That on account of the immense interests involved.. requires to : be approached with considerable caution, and no Government, in niy opinion, would act precipitously in matters, of the kind to which I have 'alluded except, on what I may term- safe and prudent lines.