IMPORTANT PROPOSALS

Hawera & Normanby Star, Volume LXIII, Issue XVIII, 29 July 1912, Page 6

IMPORTANT PROPOSALS

In the policy speech which he made at Manaia, while he was Premier, Mr T. Mackenzie dwelt in detail on proposals for promoting the iron industry in New Zealand. The subject has been fully set out, and brought up-to-date in the following letter, which has been addressed to the present Premier, Mr \Y. F. Massey: Wellington, 10th July, 1912. The Hon. W. F. Massey, Prime Minster.

Sir, —I beg to bring before your notice the proposals of the Ethelburga Syndicate, of 65, Bishopsgate, London (a financial group of high standing), in regard to the early successful establishment of the iron and steel industry and the utilisation of iron deposits. The investors referred to had previously entered into contracts in London at the close of last year, for the amalgamation of the iron interests and the erection of works at a cost of £500,----000, subject to legislation being passed embodying certain requisite powers to carry out these contracts and provide £650,000 for the erection of an iron and steel plant. I was furnished by the syndicate with a memorandum of their proposals, and also a letter to the Premier requesting the assistance of the New Zealand Government in carrying out the proposed scheme, brief particulars oi which I will supply. I believe you now have the means at command to not only give effect to the highest ideals of nationalisation, but, also to establish the greatest industrial enterprise projected in New Zealand, and further that you can confidently rely on the unanimous support of the people if carried on the lines of the Ethelburga proposals. It may be satifactqry to note that in their firm determination to make the industry a success, and notwithstanding the trouble caused by delays here, the Etheleburga syndicate lias voluntarily undertaken to provide a further £150,000 for working capital, additional to the original undertaking of last year, which was to provide £500,000 only. The large working capital to be provided represents, roughly speaking, nearly £2 per share on the total shares (350,000) of the company. Thus, as one-third of these shares are allocated to New Zealand owners, a third of the future profits go to the New Zealand owners, who are not called upon to provide any of the £650,000. Indeed, they receive many thousands in cash in addition to their fully paid shares. This provision for New Zealand interests I mention in justice to the Home investors, Avhose liberal proposals are in other respects worthy of any Government's consideration. They are entirely free of any charge of ovei--burdening the share capital of the company (350,000 shares at £1 each), while they provide double this amount for working capital (viz., £650,000. Surprise was expressed in London at their taking the risk of so distant a part of the Empire, with its comparatively small population and small market, quite inadequate in fact to absorb the whole output of the proposed iron and steel works; but, fortunately, this difficulty 3S overcome, as the investors are prepared to find not only the capital but markets. Exportation is made possible to foreign markets by the cost of production, which, under this scheme, will be the important feature of New Zealand iron works. The heavy initial outlay on modern plant to insure produc- I tion at the lowest cost, also justifies, and in fact should recoup, the State subsidy both directly and indirectly. Hy this scheme £650,000 is expended on the erection of up-to-date plant required and without any unnecessary delay or without drawing monuv from the New Zealand exchequer or risking the taxpayers' .money in such a speculative enterprise. The people will benefit by the expenditure of outside- capital and by the large and continuous circulation of money in carrying on operations, in the increase of trade 3 and prestige of New Zealand. As regards'the adjustment of the subsidy question-,, it is proposed that (a) in lieu of all bonuses proposed to be given to th&> iron industry, that a direct annual subsidy of £32,500 be given, and that the investors erect modern iron and steel "works of great and economical producing power, at a cost of £650.000, and thus enable the New Zealand works to take fuller advantage of local and foreign markets and compete with the inevitable atempts which will be made to crush the enterprise by existing powerful iron and steel combinations; \h) the State to get its iron and steel at cost price, plus 5 per cent.; (c) arrangements to be made to use the State mines coal and coke if price and quality are satisfactory; (d) at the end of forty years the company to hand over to the New Zealand Government the whole plant and all the machinery erected by them, free of any charges, or (c) under certain equitable conditions at the end of 20 years: (f) the direct benefit to the dominion in the expenditure of £650,000 of English capital in the country; (g) the consequent increased employment of labor, skilled and unskilled ; (h) the enormous consumption of coal, efce.; (i) in carrying out the scheme the investors will probably pay in royalty to the State during the period of continuance nob less than £150,----000. About 25 million tons of coal would b? used during this period, and probably not less than 50 millions sterling of new wealth would be produced from raw material. Though the above estimates are merely approximate, there is no doubt that they would be more than realised. The great thing to do is to get the big works started without further delay by people who can e:\ery this great project through. The Ethel burgh scheme is worthy of the dominion's highest approval * and support. It is on the true lines of the greatest good to the -lominion's industries and workers.—l remain, your truly,

J. H. WITHEFORD