THE NELSON AND MARLBOROUGH DEBT

Marlborough Express, Volume III, Issue 121, 13 June 1868, Page 4

THE NELSON AND MARLBOROUGH DEBT

The Superintendent of Nelson recently proposed to appropriate £12,000, set apart to pay off the Nelson debt due next month. We take the following from the Colonist, whose view of the subject is, we believe, a just one. “ Such an appropriation, we contend, is not only illegal, but is worse than profitless, as the General Government has the power to impound the whole amount from the Province’s share of Customs and its land fund; besides being a breach of faith, and, therefore, damaging to the credit of the Province, as well as productive of almost immediate punishment. We copy a correspondence on the subject, which has taken place between the Colonial Secretary and his Honor the Superintendent, who, to our thinking, makes a very poor reply to the arguments ol Mr. Stafford, whose case can be made even stronger by reference to the provisions of the Public Revenues Act, to which it is not convenient for the Superintendent to refer. Some people do not appear to realise this fact, that if this money doe# not go to pay our debt we shall lose more by the General Government withholding our ordinary income until the total debt, including our share of Marlborough’s liabilities, is refunded. The object of this appropriation is intended to be the construction of a Dry Dock in Nelson, to cost at least £32,000, moat probably £40,000.” Copt of Correspondence between the Colonial Secretary and his Honor the Superintendent, relative to the Provincial Debt. To his Honor the Superintendent, Nelson. Sir, —The Government has had under its consideration the question of the payment of the Nelson debentures, which become due on tbs Ist July next, and the several communications which have passed between the Colonial Government and the Superintendent of Nelson on the subject. The position of the question is as follows: When the original loan, amounting to £29,000, was authorised under ‘‘The Nelson Debentures Act, 1858,” no sinking fund was provided bylaw, but in 1864, the Nelson Provincial Legislature, desirous of remedying this defect, provided a sinking fund of two per cent, out of the Provincial revenue, on the sum of £21,500, that being the share apportioned to the present Province of Nelson, under the “ Nelson and Marlborough Public Debt Apportionment Act, of 1860.” In March 1867, this sinking fund had accumulated to £1,290, and the same Legislature, anxious to supplement this compare-

lively small provision, which was quite insufficient to meet the debentures due on the Ist July, 1888, appropriated £15,000 for investment for the same purpose. Out of this sum, £12,000 was invested by your Honor’s predecessor as a fixed deposit in a separate account in the Union Bank of Australia at six per cent, interest; with the express object of enabling the debentures, when they matured, to be duly paid. The appropriations and investments were from time to timo reported to the General Government, which was thus led to believe that ample provision had been made by the Provincial Legislature for almost the whole ,of the debt due by Nelson, and that the small residue could easily be met in a similar manner. The Government is now, however, informed by your Honor, within a few weeks of the maturity of the debentures, that the present Provincial Government of Nelson purposes, without even the authority of any Act of the Provincial Council, to divert to other purposes the appropriation of the £15,000, and of the interest accrued therefrom, from its original object, only leaving the sinking fund (estimated at £ 1,720, and which was absolutely enjoined by law) to meet a liability of .£21,600. As a justification of this course, your Honor refers to the 2nd section of the “ Public Dents Act, 1867,” which provides that the principal, interest, and sinking fund of the provincial debentures shall be charged upon and paid out of the consolidated revenue of the colony. It is obvious, however, from the context of the Act to which you refer, that the obligation imposed on the Colonial Government is only a part of the general scheme contemplated by the Legislature, and that the fulfilment of that obligation must depend on the completion of those arrangements now pending in London, which the “ Public Debts” and ** Consolidated Loans Acts ” require to be made, before those Acts can be carried into practical effect. 1 would also call your attention to the fact that these Acts may possibly be disallowed by her Majesty, in which case the Provincial Government of Nelson would alone be responsible for providing the funds with which to pay the Nelson debenture*, and if the course proposed by your Honor should be adopted, and the source of payment created by the Provincial Government be destroyed by your Honor, no funds will be available to meet tins liability, and the consequent result would appear to be the non ■ pay merit of the Nelson debt. Under these circumstances, I trust your Honor will reconsider the proposal to devote to other purposes the funds which the Provincial Legislature has deliberately set apart to discharge the liabilities ol the Province of Nelson, and 1 am encouraged to believe that your Honor will, on re-consideration, recognise that the funds so set apart (and which I understand are still available for the purpose) should he applied as originally provided, both because the honor and credit of the Province of elson are concerned, and because, as a matter of sound policy in connection with that province, to act otherwise would afford a precedent likely to be hereafter most prejudicial to its interests. The debt of Nelson is comparatively small, and can bo at once discharged in coaformiy with the intention of the previous Provincial Government and Council, which, witii a wise foresight, made timely provision to meet it, but it your Honor, ignoring all liability, should persist in using tor other purposes the funds provided tor discharging the debt o< die province, it is easy to foresee, in tile case ot provinces whose financial burthens are infinitely greater, the advantage that may bo taken by them to the subsequent prejudice ol Nelson in consequence of that action. Ljiavej-j&c., E. VV. Stafford. Colonial Secretary’s Office, Wellington, May 21st, 1888 To the Honorable the Colonial Secretary, Wellington. Sir, —I have the honor to acknowledge the receipt of your letter of the 21st instant, respecting the debentures of this province, which will become due on the Ist of July.pext. ...... The statement of which your letter commences is perfectly correct, so far as regards the intention of the Provincial Council in its appropriation ol the sum of £16,000, and the steps taken by the lata Superintendent towards carrying out that intention, by placing the sum of £12,000 on fixed deposit, in the name of thrqp members of his Executive Council, at the Union Bank of Australia, until the date at which the debentures become due. The amount was, as you are aware, never added to the sinking fund account, nor paid over to the trustees appointed for the management of that fund, and was, on the contrary, retained, and now remains within the direct control of the Executive Government, and therefore at all times subject toreappropriation by'the Provincial Council. lathe meantime the General Assembly, by the second clause of the “ Public Debts Act,” relieved the provinces from the date of the passing of that Act—namely, the 10th of October, 1867—from'all liability to provide for the payment of the principal of their loans, otherwise than by the operation of the ordinary sinking funds. The same Clause provides that the interest and sinking funds oh Provincial loan# shall also be paid by the colony, but only after proclamation of time and place by the Governor. The obligation of the colony to provide for the due payment of the loans themselves being on the.contrary made operative from and after the passing of the Act. ■ The third clause provides that all payments made by the Colonial Government bn account of interest and sinking fund upon Provincial loans shall be charged against the'province in respect of Tfhich such payment may have been made, anil deducted from any moneys payable to-such province. No such'provision lor repayment is made with respect to the loans themselves, aiid it appears to me to be beyond dispute, that it was the intention of (be, Legislature/ and that the Legislature 'deliberately enacted, that Jtninediatejy on the passing of the “ Public Debts . Act,” the provinces should' be absolutely relieved from the. .repayment, Of, their loans, otherwise than by the operation of sinking' funds,, and that such loans, should be provided for, as they fail, due, by the General GoVerpment, and not in any way bo. charged back Again to the provinces. ’ .' ''V,'""' • *' "*■ I cannot conceive that the provisions of the “ Public Debts Act” admit of any other interpretation, or that there is any ground whatever to justify the exception of the Province of Nelson from the benefit of those provisions. ‘ * i ' ' 1 It it true that before the passing of the “ Public Debts Act,” when it was the duty of the provinces, and not, as now,; of the colony, to provide for the payment of their loans, the Legislature of this pro-

vince appropriated a sum of money towards the redaction of their debt. The Provincial Government, however, retained possession of that money, and I conceive it is impossible to question the right of the Provincial Legislature, under totally altered circumstances, when relieved by the Legislation of the colony from the liability which it was intended to meet, to dispose of the amount as they think most desirable.

1 may mention that it was never my intention, as you appear to conclude, to re-appropriate the £12,000 without the sanction of an Act of the Provincial Council.

Shortly after the passing of the “ Public Debts Act,” namely, on the 28th November, 1867, I furnished the Colonial Government, at your request, with full particulars of the position ot the debentures in question, including the date when due, rate of interest and sinking fund, and also the amount of sinking fund, which was stated as £B6O. No reference whatever was made to any sum of £15,000 or £12,000, or any sum beyond the ordinary sinking fund being available to provide for the payment ot these debentures ; while, on the other hand, in my letter of the 28. h November, accompanying the return, 1 called your attention to the fact that they would become due on the Ist July, 1868 ; any farther explanations being rendered unnecessary by conversations I had with the Colonial Treasurer, in Wellington. 1 must therefore be allowed to protest most emphatically against that part of your letter to which 1 am now replying, which Implies that you are only recently in possession of the intentions of the Provincial Government on this subject. The possible disallowance of the “ Public Debts Act” by the Queeu, does not appear to have been in the contemplation of the Colonial Government, at the lime of iu enactment by the General Assembly, or they would otherwise, I presume, have reserved the measure for the signification of her Majesty’s pleasure thereon, as is the usual practice in such eases, instead of advising the Governor to give his assent to it on her Majesty’s behalf, so as to bring it into inline.liale operation, wholly without reference to tlio other measures to which you refer, or to tlie completion of any arrangements whatever. 1 am unable to discover that the honor and credit of the Province of Nelson can in any way be injured by calling upon the General Government to fulfil engagements imposed upon tlioin by the Legislature, or that tiie interest* of the province would be served by Hie payment of a considerable sum of money for the relief of the Colonial Treasury. I have, &c., Oswald Cdbtis. Superintendent’s Office, Nelson, June Ist, 1868.