FINANCE.

Lyttelton Times, Volume XV, Issue 878, 10 April 1861, Page 3

FINANCE.

To the Editor of the Lyttelton Times.

Sib, —I wish to address a few words to my fellowcolonists, if you will permit me the use of your columns, upon the financial condition of this province. I am sorry to do so in the absence of the Superintendent; but that absence, now prolonged to several weeks, and promising to continue for an indefinite period, must not preclude me from calling attention to passing events, which ought not to be allowed to escape notice by delay. If I may judge from common conversation, the late disclosures in the financial policy of the Provincial Government have been received with a very general feeling of shame and distress by allclasses of our community. It would indeed be very disgraceful to the province were it otherwise. And it seems to me that the time has arrived when the public must decide whether the Government is to be conducted upon a system of honorable and creditable finance or upon schemes of wild speculation, which too often are the prelude to public dishonesty and ruin.

The letter from the late .Provincial Secretary to " the clerk in charge of the Emigration Office " is not the only act, disgraceful as it is, for which the Government is responsible. I will allude to others : but in passing I must remark upon that on which Mr. Selfe has been silent, the intentional slight conveyed in the form of addressing that letter. Mr. Selfe is one of those gentlemen who helped to found the colony. His labor, his valuable time, his great abilities, his high and worthily respected character, and his private means and credit have been freely, liberally, and gratuitously applied to forward our interests and promote our prosperity. He has been for six years the unpaid agent of the Provincial Government in England, and he is appointed by law to receive all important communications on the public service of the colony in England. No communication more important could have been addressed to England than that of announcing the deliberate intention of Government to repudiate, even for a time, its engagements to the public creditors. It was a breach of the spirit if not the letter of the law to address such a communication to other than the English agent, appointed, not by the Superintendent, but by act of the Provincial Council. I cannot account for it; but I will assume the most favorable hypothesis, and believe that the Government was really ashamed to request any gentleman, especially one of Mr. Selfe's character, to convey such a message to the bank, and therefore confided it to the " clerk in charge." Sir, I wish to refer to the financial acts of the present Government from the first, with a view to suggesting a remedy. The Superintendent took office in the end of 1857, with a full exchequer and ample credit; by the middle of 1859 the exchequer was empty, the Government in debt, their credit gone, and the whole progress of the colony at a stand still. How did this all occur? When the crisis began, it was of course necessary that the blams should be thrown somewhere; and the bank was selected as the scape-goat. The Superintendent led off in a public speech, in which he attributed the

distress to the want of a circulating medium a sentiment which has been the cry of every charlatan in finance in all countries, and at all times. You Sir, and the public joined in that cry to a certain extent; and the attempt was tolerably successful to Bliift the blame of that crisis from the real authors —the Government of the day—which by its useless expenditure deranged all the money and labor market of the Province. I shall be told, no doubt, that I was not in the country and don't know what was going on lam sorry to say I know only too well; a great deal better than most of the public here knew at the time, the sort of gambling both public and private which had supplanted legitimate trade and prudent expenditure. But I need not ask what was doing If you turn to the public accounts for the year ending September 30, 1860, you will find that no less a sum than £68.000 (I speak from memory) was expended in public works in that period. Now the population then was about 10,000 ; the male adults not above 2,000 ; those who could have any interest m public works only a small part of the latter number. I think I know as well as most men how much money can be spent here in public works without taking the labor off the land and mi urine private enterprise. It was my study for four years I do not require then to be told that monstrous extravagance of every kind was going on, for I am quite confident, as any reasonable man must be that the £68,000 could not have been got rid of without it. When then I hear on arriving in the colony that such a laboring man made £2000 out of the Government — such another took a contract and underlet it for £200 or £300 forthwith, the subcontractors making. 17s. a day—and numberless tales of the same sort—l am not only not surprised but I say that without such things, without a general plunder of the public chest, it would not be at all possible to have got rid of the sum of nearly £70,000 in one year. But besides this actual expenditure the Government ran in debt to an enormous amount, not yet wholly liquidated. Now what was the natural and unavoidable result of this flooding of the labour market with Government money? First, the raising of wages, of prices, of everything to an unreal amount; secondly, the expansion of the land sales to an unnatural extent, which could not be maintained. Much of the money paid out of the chest returned to it in the form of land fund Then everyone began to cry "if we do not buy land it will all be gone!" So all went to buy, and people bought land instead of paying their debts- they bought, in short, with other people's money instead of their own. And so a spirit of gambling and speculation arose, which has corrupted the tone and character of this community to an extent from which it will not recover for many years. As in the South Sea bubble, as in the railway mania, as in all periods of financial insanity, there were those who believed that this progress was all real and would last for ever; and the Superintendent perhaps only fairly represented the excited imagination of this portion of the public, when he gravely proposed to the London 'Change a request for a loan of a million and a half to make railroads over a country not yet a tenth part stocked with flocks and herds, still less with inhabitants.

The crisis carae at lasfc as a matter of course I will do justice to the bank in this emergency ' It had indeed been greatly to blame in extending its accommodation unduly. In a community where all the discounts pass before one man or board, as is the icase here, a crisis ought to be an impossibility It is of course the fault of the bank when a crisis occurs*. The bank then must take the fuli blame of not foreseeing the inevitable result of the outrageous extravagance of the Government, and of not limiting their business, from the first, to meet the impending emergency. Had they done so the crisis would have come earlier in a more mitigated form. But I am more disposed to be grateful to the bank for the courage and honesty with which it at once met the danger, when it saw the error, because I know well that by doing so it saved this community from wide-spread ruin, and numbers of people from great misery. Had that state of things continued much longer, universal bankruptcy must have been the result. To say that the crws was caused by the restriction of the bank credits 'is to place the cause for the effect. Had the bank not restricted its credits, it would simply have shared the impending ruin which it could not possibly have averted. The cause of all was the over-trading and over-speculation induced in the community by the derangement of the money and labour market by the sudden and ill-timed prodigality of Government. I am aware there are some who think that the Government was right to run all risks and "go ahead" as long and as fast as it could. Do these gentlemen remember the story of the hare and the tortoise, or the proverb "More haste worse speed?" Had the Government held ample funds in its hands, and only expended gn public works what it prudently and legitimately could, the money crisis would never have occurred; or even if it had occurred from other causes, the Government could have at once stopped it by throwing its chest open to the labour market. The emigration need never have ceased or slackened! The public funds, instead of being, flung into the laps of a few rapacious contractors, would have been ready to aid the newly arriving immigrants, who, as it turned out, were unjustly deprived of their fair share of the funds applicable to wages.

I am often asked if I do not think the colony greatly advanced in the last three years. Sir, when I remember what advance was made by the first colonists, about 1200 in number; and again what progress we witnessed in the first year of our Provincial Government, when the public revenues were estimated at about £4000; and then remember that in the period I am. referring to the population increased by about 4000, and the public revenues were estimated at about £100,000,1 am only amazed at finding that the great burst of prosperity of 1858 could by any ingenuity of blundering have been limited to about eighteen months' duration, and that a period of depression and dulness should have lasted ever since, that is, for nearly two years.

I believe, sir, that all this resulted from an error in judgment on the part of the gentlemen comprising the Government, into which they were no doubt startled by having at their disposal sums of a magnitude to which they were perhaps unused. I readily forgive them the faults of a disturbed judgment. But I come to more serious matters. We could pardon folly but not lawlessness. The Provincial Council met in October, 1859, and, for the first time in the history of this province, or I suppose of any government pretending to be constitutional that is, responsible to the people—the Superintendent virtually refused to acquaint the popular body with the state of the public purse. It has always been to me a matter of surprise at the indifference with which this step was regarded by the people; but I am not surprised that after this, the functions of the Provincial Council should have been, as they have been; wholly superseded by the Superintendent, and that body reduced to a complete and ridiculous' nonentity. The Superintendent habitually refuses to spend money voted by the Council, and habitually spends money which has not been voted by the Council. It is almost incredible that in this celebrated year half the public expenditure was in defiance of the votes of the Council, much of it in the most idle and absurd crotchets of the public works department. It is common to say that there must be a certain discretion left with the Government between the sessions of Council. Yes; and a very certain not uncertain discretion it should be. The plain duty of the Superintendent is to call his Council together if he finds it necessary to deviate widely from their appropriations. At present the voting of the supplies by the Council is an absurd and superstitious ceremony j which has no practical value whatever.

But again. The Superintendent proceeded on his own authority to supplement the empty chest by a loan from the Bank; and the Bank, very ungratefully accused by His Honor of stinginess, behaved, ;as I conceive, with uncalled for and most imprudent liberality*- Now I, sir, for one, as an elector of the province, possibly a Provincial Councillor, 1 say publicly I will never recognize any advance made by the Bank or any one else to the Government. If I were called on to vote funds for replacing such an advance I would not do soi The Superintendent has no more power in law, in equity, or in honor, to borrow money on behalf of the province than I have. He can give no security for such a loanand the Bank makes it at its great peril. Sir, if the

Government finds itself in difficulties its duty is clear: to call its local parliament together, and lay ihM a 9* tl, em-. There are "W modes in which the Council might see fit to meet the emergency. It might choose to raise money by debentures; or, secondly to issue bills at short dates, that or %'rZ 6 ■•I Un- fU. nded uinßtead of a funded debt or, thirdly, it might chooge to raise money by K^il VT^' t0 make a loan a mere t> O o£ debt to the Bank. There are other possible courses, but all these are matters for which the people by their representatives are responsible; and for the Government to take the matter out of their hands! and act wholly without consulting them, is equivalent to an entire annihilation of the legislative body and a transference of all its most valuable functions to one man. The Provincial Council can only B peak by an Ordinance; and there has been no Ordinance to sanction the whole of the monies lent by the Bank to the Government in the last two years Again: it is most strange that when the Government had to face their difficulties, they never contemplated or laid before the Council or the public but wholly ignored the expenditure which they had instructed the English agent to incur on account of immigration. They directed their agents to draw upon them for any suras wanted to maintain the immigration; and they made no arrangements of aay kind whatsoever for those drafts being honored at the Bank. Such ignorance or neglect of the commonest monetary operations is quite incredible m men undertaking to direct the affairs of a government. The funds required for the maintenance of the credit of the province, by enabling it to meet its engagements, were provided by the Bank on the personal security of the agents of the province in England. , .

But it will hardly be believed by the public here that for many months after the embarrassments of the Government had commenced in the colony they were concealed from the English agency, so that the iMighsh agents, on applying to have their drafts on the Government cashed, were actually placed in the position of being met by the remark, "If we cash your bills on this side, we shall have to meet them in the colony, as your Government has no funds wherewith to do so." What would be said of a merchant who conducted his business in a similar manner? Certainly a disagreeable alternative as to Ins character would suggest itself to the mind Are we content that the public affairs of our colony shall be managed in a manner which would place any tradesman in the 'Gazette' in a week! I must state another grievance. I sat some weeks ago a spectator in the gallery of the Provincial Council. I heard it there stated openly by the then Auditor, in defence of the then Treasurer, who was attacked for having frequently absented himself trora his office, that he did so absent himself frequently in order to avoid having claims made on him which he had no funds to meet. I did positively hear—will it be believed ?—I did hear the organ of the Government in the Council state that the Treasurer had been accustomed to absent himself for the purpose with the cognizance and with the approval of the Government. I sat in mute amazement, expecting to hear some member rise to denounce in befitting language this disgraceful and discreditable dodge; and I regret to say I listened in vain. The explanation of the Treasurer's absence appeared to be accepted by the Council. Well, I said to myself, thank goodness there is a press. In'" the fourth estate " is the true guardianship of the public character of the community. What then was my surprise on looking to the 'Lyttelton Times' reports of the debate to find that this statement by the Auditor and Treasurer had been kindly omitted, and the whole matter suppressed. Since then my speculations on the future of this colony have been gloomy indeed. To think that the Government, the Council, and the press—the three guardians of public liberty' public honor, and public credit—should have consented as it were to blind the public to the manner in which their affairs were conducted, to hush up the fact that the Government had consented to do that which, in a merchant, would be a legal act of bankruptcy—all this, I say, did strike me as so novel and so strange, that I failed to recognize one feature of the community in whose public affairs I once felt it a pride and an honor to take a part.

Now, let me ask, why has there been all this singular delicacy to allude to our embarrassments? I will ask you plainly, sir, is it not because we are in the market for afresh loan of £300,000, and so do not like to whisper any thing which may throw doubt on our credit? But is it imagined that all our tongues are tied on this subject? Are there not plenty of those who are most likely to be listened to by money-lenders saying daily in private "this province has no sufficient security in the present conduct of affairs to offer for such a loan?" And whilst this is the case does not all delicacy or attempt at concealment on the subject of our financial dealings merely give weight to their opinions? I for one never disguise my conviction that, until the laws for the management of the public revenues are materially altered, any capitalist would be most imprudent to risk investment upon their security. A State which can raise the salaries of its officials, whilst it repudiates its debts, and directs its Treasurer to stay out of the way of its creditors, is a State not to be trusted by any prudent man.

I now ask the public, do they intend these things to remain so ? At present I am not aware that any notice has been taken of the men who have done these things except to raise all their salaries. And I must say that if any gentlemen; are expected to sacrifice their own characters by so conducting public business they ought to be paid very handsomely for the sacrifice. Sir, I said the Provincial Council had been reduced to a cypher. Since writing the above, I see by your paper this morning that the inferior animals are not slow to kick the sick lion. So accustomed are the people to look upon the voting of public money as a matter of mere form that the inhabitants of one district get into a passion because the Government refuse to spend the public money illegally.

Could the Provincial Council be subjected to a keener satire than that penned by the Lincoln Road parishioners, when they undertake to procure for the Government an indemnity for the expenditure they demand, if at least the road be done to their satisfaction? There is something almost clever in the happy manner in which the servile dependence of the Council, and the Superintendent's incapacity notwithstanding to manage it, are both suggested in this petition.

I should not think it right to make these remarks without proposing a remedy; and I naturally turn to the example of our mother country, and enquire in what way the paramount control of Parliament over the financial operations of the Executive Government has been secured. I do not know that any improvement can be made in that admirable system which has_ grown up in the course of ages. For the system in England has not been the result of theory or invention, but has arisen by the correction of abuses as they have been discovered, by the adoption of remedies against evils as they arose, by the practical necessities of a Government in which the popular element has been ever steadily and surely increasing in power and influence. Your readers will pardon me, then, if I state in a few words the English system of government in matters of finance.

The public revenues are paid by the collectors into the Queen's Exchequer. Now the Exchequer is an office independent equally of the Crown and of Parliament; presided over by the Comptroller-General of the Exchequer, an official who is only removable, as the judges, upon an address to the Crown by both Houses of Parliament. The Treasury, that is to say the Ministry or responsible or political Government, can obtain no money except from the Exchequer. When the Treasury requires money for the public service, the Queen issues a warrant under her sign manual to the Comptroller-General, countersigned by some of the Lords of the Treasury; the Treasury then issues a separate warrant, calling for the issue of the money in compliance with the command of the Crown; and the Comptroller has to satisfy himself that both-these warrants are correct and also that the money named in them has been voted by Parliament. If any step in the link is wanting he refuses to issue. If all the conditions are satisfied he pays over the mdney to the Paymaster-General.

It may be thought that in England, where the

dS^^TA" 11"1?* 6"t0 Pari «nient is no immediate, it would be quite sufficient that they ihonM responsible for their use of it; yet we find they are not trusted with a farthing. The money is hefdby an independent authority, and they are unable to exceed the votes of the House of Commons. There ' is indeed a means by which the ministers can to a very small extent modify or exceed the Parliamentary estimates. The Treasury holds at its disposal a small floating balance, called "The Treasury Chest Fund," which does not go into the Exchequer, and appears to hare existed from time immemorial; out of which they pay any sums not Toted by Parliament, by way of loan to the department incurring the expense. The item is always included ro the estimates of the succeeding year, and then «£ ?.T M "**"£ out °f the Exchequer monies to is at D rS ry HCh? StFund" Thi"^king balance be? c^t o? th °Ut tW,° millionB 'that »le« «"» 8 ThisTs tht t? f nni? al of the country. can ui«S S c^ tent towhich can exceed the estimates, and if they want mom estimates, and in the case of the mil service to the extent of the current and ensuing quarter's revinne! a\1 OTl°VO^ power " settled and Kmited by law and the bank in prohibiting from exceeding it. So* with Exchequer Bills; the Government can make no issue, nor can they raise a farthing in this or any other manner, except by authority of an Act of

Now, when I see what has occurred in almost every province in New Zealand: that the Superintendents have made 'ducks and drakes'of the ■ft V% 7' setti"g T utterly at nought the legislative bodies —and I might use just the same language as regards the General Government, forTt treats the House of Representatives in precisely the same manner;-when I see how feeble is the ™IT* °l Parhamenta >T resposibility here, compared to what it is m England-then I say, additionally needful is it that we should here adopt the true and time-tested expedient of our old country, and once for all, take the public purse out of the hands of time-serving, log-rolling, speculating, popularity hunting-sad events compel me to add, utterly unprincipled-Superintendents, and put it into a custody where it will be issued in accordance with law alone. I would rather see a law for the whole colony on this subject: but let Canterbury set the example.^ One good provincial statute is the best way in which to get a general law passed. Let us not Z£T^T^ OurTreasu«* « really the exchequer. The body here corresponding to the Treasury PmS D« ?1 8 e» SuPerintendent and Executive Council Let us have an Ordinance next session making the^ Treasurer independent: irremoveable, except for bad behaviour; with such a good salary as to induce a really good man to take the office, and hold it for life; let him find ample security; and make aU monies paid away by him, except under Act of Council and under warrant of the Superintendent be instantly recoverable in the Supreme Court at the instance of the Speaker of the Provincial Council— recoverable either from the Treasurer or from his sureties. If it be necessary to allow the trovernment some little discretion to vary the appro. pnations, let a sum be voted on the estimates annually, as an imprest in aid of the general service of the Government, to be advanced subject to a vote of the Council the year following. Again, there is great confusion here as to there being any real responsibility at all. If money be expended contrary to law, can it be recovered at law? And from whom? If you come on the Treasurer, can he not plead the warrants of the Superintendent as his discharge? Can you make the Superintendent liable? I believe the state of the law to be too doubtful to enable a successful action to be maintained. Why not set this at rest? Let all warrants for the issue of money be signed by the buperratendent and two others of his Executive Council, and let them be made immediately liable to be sued for the money at the instance of the Speaker of the Provincial Council; and in addition*make: them liable to criminal proceedings, to fine and imprisonment for any illegal action. This would make responsiblity a reality. Few people, I think. understand that in England " ministerial responsibility is a reality." The minister is liable to impeachment by the Commons before the Lords; his fortune and his life are the stake, if he gives evil advice to the Sovereign. A majority against Him in the Commons is a civilized and gentle mode of •i^fr- the ultimate contingency should he hot yield. Hisretirementwhenin a minority is the peaceful recognition of the real power which is veiled in these courteous forms.- But our ministers here— and I speak of all the ministries of all the colonies —are under no such latent pressure. There'is no usage or tradition to fix a common law about bodies and institutions created yesterday by statute, and there is nothing fixed by statute. Our responsible Government is only a name: but I see no difficulty in making it real, in the manner I suggest. Sir, I have much need of the pardon of your readers for trespassing so largely on your columns. I verily believe that these Provincial Governments of ours—with all their vast, usefulness, not only in populating the country but educating the inbabi- . tants to their highest duties as the citizens of a free state, by forcing them to consider the public weal as well as their individual interest—these governments, I say, I believe will not last much longer in their present form. Not only here but in most of the Provinces the Superintendent has completely crashed the Provincial Council. For any practical purpose it does not seem to me to exist. And now the Superintendent has left the Province for several weeks, I am informed there is no Deputy-Superin-tendent. lam also told that he has not been heard of since he left. In short, having shewn us that we can do without a Provincial Council, he has ended by shewing us how we can do without a Superiotendant; and our enjoyment of local government is much like the recollection of a convivial evening, of which nothing is left but the headache, and—the bill. I have not written to attack any individual. I am not dealing with persons, who pass away, but with laws and institutions which are permanent, and fix the character of a community; and I am sure I shall be forgiven, even by those who differ from me, for proposing as a distinct cry for the hustings in the pending election, "An independent Exchequer." '

Though I have ceased to take any direct share in the Government of the colony, I have lost none of my deep interest in its welfare, and I shall be pleased to feel that any effort of mine ; has helped to place the administration of our affairs in hands which may restore to us progressive prosperity in the colony and respect in England. I am, sir, your obedient servant,

JAMES EDWARD FITZGERALD.

The Springs, April 4, 1861.