THE New Zealand Herald. SPECTEMUR AGENDO. MONDAY, OCTOBER 30, 1871.

New Zealand Herald, Volume VIII, Issue 2422, 30 October 1871, Page 2

THE New Zealand Herald. SPECTEMUR AGENDO. MONDAY, OCTOBER 30, 1871.

Ix looking over the expenditure columns of°the Provincial Accounts for the first three quarters of the financial year to the 30th September, and contrasting thorn witli the liabilities nominally incurred under the Appropriation Act of last session, we are struck with the large proportion of the eu"-ao-ements of the Government still lying o by unnoticed and undischarged. The average quarterly expenditure under the heads, establishments, miscellaneous, and liabilities for IS7O, may be stated at £21,400, and the income from various sources at £2G,500. But while the expenditure has thus been kept under, at the rate of £5,200 per quarter, resulting just now in a balance in the Treasury, in conjunction with the surplus of £2-3,000 from last year, of some £42,000, there still remains chargeable against the current quarter the enornfous liability of £58,334, or au amount almost equivalent to the total expenditure for the first three quarters of the year. This is, to say the least, an anomalous state ot things. In what way it is to be accounted for is more than we can explain, unless we are to suppose it to be the result of the peculiar policy of the local Government, which, apparently, has made it an object rather to amass the pro?incial funds, than to push forward the public works. One of the heavier items composing this large unexpended appropriation, is the sum of £20,000, set apart for the Kaipara Eailway. But assuming that only a proportion of this money will be needed before the end of the year, there is still between forty and fifty thousand pounds to be provided for during the current quarter, if the intentions of the Legislature are to bo carried out. The other leading items remaining unexpended to the end of September areas follows :—Public works on goldfields, £5,011 ; public works throughout the province, £1,161; roads and works North and South, £2,955 ; triangulation, £922 ; education, £2,550 ; eteam subsidies, £1,217; liabilities for 1870, £2,G00; road steamer, £1,000; fisheries, £400; besides a sum of £7,122, apparently still due to the General Government for police services for the present year and a portion of last year. Why this money has not been paid over long ago to those entitled to receive it, is not easily comprehended ; but, according to these accounts, it would appear that a sum of £230 is all the money that has been expended on the police force of the province for the last six months. It cannot be wondered at, therefore, if there should be found some heavy outstanding amounts chargeable against the province during the last quarter of the year. To the amounts already given has yet to be added the cost of the regular departments—Executive, Legislative, "Waste Lands, Harbours, Hospitals, Asylum, G-aols, Belief, and the variety of miscellaneous charges and expenses which go to swell the gross quarterly expenditure of the province. The whole, as stated already, amounting to a total of nearly £60,000, having the larger proportion thus crowded, we think, unadvisedly, into the last quarter of the year. But it is not now intended, we assume, to carry out the instructions of the Provincial Council in reference to many matters decided on last session, and provided for in these appropriations. Thie ia to be regretted on many grounds. Some of the services which have not been carried out, as, for instance, the subsidy to steamers in various localities, and the bonus on the exportation of cured fish, were of a nature well calculated to do much good, and ought not to have been allowed to fall through. This remark applies,' also, to the vaiiu public works on the goldfields, which the Government in so remarkable a manner failed to carry through during the winter months. The neglect to provide suitable wharf accommodation has been especially felt at the Thames, and this is one of the prominent shortcomings of the provincial authorities, for which, we fear, no valid excuse can possibly be found. But even as affairs stand at present, with all these works left unaccomplished, unless the balance in hand of £22,000 to the credit of the goldfields is unfairly drawn upon, there will not be funds enough to meet the whole of the outstanding liabilities for the year.

The average income of the province for the first three quarters, we have shown to be about £20,000. But we have good reason to believe it will not exceed £20,000 for the current quarter, £12,000 only of which will be available as general provincial revenue. If this amount is added to the existing provincial surplus of, say, £20,000 over and above the gold duty, we have a sum of £32,000 in prospect at the end of the year to meet a demand, probably, of not less than £45,000 from all quarters. There is nothing flattering, therefore, in the financial condition of the province just at present, especially in prospect of a diminished income after the expiration of the current quarter. "VVe commenced the year with a balance to our credit of £25,000, but not only will this amount have been absorbed since then, but a very large proportion of the gold duties as well, which ought to have been employed iu developing the goldfields themselves. Had even a moderate proportion of this money been judiciously expended for that purpose, there would have beeu less ground for complaint. But remembering how much there is at stake on the successful working of our goldfields, we think the which deprives them of a fair amount of attention, and a reasonable proportion of their own revenue, can only be regarded as in the highest degree unjust and reprehensible. Such a course was ill calculated to secure the confidence of the public, aud its continuance, we trust, will be persevered in no longer. It would be the duty of the Provincial Council for the future, if it has any power at all to bind the Executive in the matter, to insist on justice being done in the administration of the goldfields. Some new legislation on this subject, it has been intimated, may yet be looked for during the present sitting of the Assembly, and if this should only be in the right direction, it will, certainly, not take xilace before it was needed. • The insolvent condition of the Europeau Assurance Society, a well established company, aud one doing a large business in these colonies, calls for more than passing comment at our hauds. It affords an example of the superiority of investment in local over foreign institutions of this and similar character, where the general business and conduct of the company, carried on by a local directory, are open to the jealous vigilance of those immediately interested in its stability and success. This, perhaps, may, in New Zealand, refer more especially to companies intended to cover risks by fire and sea, for we have already in the Government A ssurance and Annuity Fund, the surest guarantee that can be afforded against the occurrence of such a calamity as that caused by the insolvency of an assurance company of such standing as the European. Had the Government of Victoria acted with the same wisdom as our own, in establishing in the early stage of its career a life insurance and annuity department, we should not now hear of the loss by the " Euro- " peau" being so keenly felt in that colony, the premiums paid to that company alone by Victorian policyholders having amounted to a sum cf £30,000 per aunum. A slight sketch of the origin, of the disasters which have brought about the ruin of the European Assurance Society will prove both interesting and instructive, for our readers must not suppose such cases are of rare occurrence. AVhat has happened to the European has happened to scores of other companies, aud the same, or similar causes of disaster are probably at the present moment undermining, though with unseen iuiluence, the vitality of companies whose standing is now perhaps considered equally as good as was that, till lately, of the European, but which at auy time may prove as evanescent. McOulloch very truly tells us, and it would be difficult to fiud a more reliable authority on such a subject, that life assurance is one of the most deceptive of businesses, •and that offices may for a long time have all the appearance of prosperity, which are, nevertheless, established on a very insecure foundation. As bearing out these views, we need only refer to what has occurred in the actual working of assurance companies, as contained in a statement made in a petition presented by Mr. Jacob Bright to the House of Commons, in 186S, on behalf of the bankers, merchants, and citizens of Manchester. 3?rom that petition we gather that, up to that date, nearly four hundred assurance companies had been established in Great Britain, one half of which had been launched during the seven years preceding 1868. Of. these four hundred companies, only about one hundred and twenty were in existence at that date, and fifty of these were in course of being wound up by the Court of Chancery. With such facts as theae before us, we may, we think, look upon the case of the " European " as one pregnant with interest and concern to policy-holders generally. We find from the Argvs that its ruin has been chiefly caused by what that journal stigmatises as " management which has " been at least lax, and to which even " a harsher term might be applied." It would eeem that the more immediate causes of its decay have been brought about by the amalgamation with it of other companies, some of which, we are told, were launched expressly for the object of incorporation, and that all such cases of amalgamation have been attended with a considerable amount of profit to persons connected with the management. With policyholders to the number of 30,000, it covered life risks amounting in the aggregate to between nine and ten millions sterling, and its liabilities for annuities reached a sum of £18,000 per annum, while its responsibility on fidelity guarantees was also very large, its premiums in that branch, amounting to £40,000 a year. Its total premium income was £338,000, its accumulated fund £600,000, but when inquired into it turnedjout that this boasted reserve fund was in a great measure a myth : that, in fact, a large portion of it consisted. in nothing more than the

estimated goodwill of the thirty-eight companies which, from time to time had been amalgamated, with it. Itß paid up capital was .£160,000, and its subscribed capital £800,000, but, as the Argus very naively says, " dummy- " ism is as well understood, and as " habitually practised in London as in " Melbourne," and it is, therefore, extremely questionable whether it will be possible to call up the remainder of the subscribed capital for the benefit of the unfortunate policy holders. It is satisfactory to feel that to the colonists of New Zealand, a measure of escape has been made by the Legislature from such an occurrence as that which has suddenly dissipated past saviugs in Victoria to the amount of £30,000 per annum. Just as the Government became security for the deposits in the savings banks, by conducting the business itself, has it removed all doubt and uncertainty from the minds of all persons desirous of becoming annuitants and life assurers, by opening a special department for the business, the stability and soundness of which is guaranteed by the colony, the payment of aunuities • and policies being made a charge upon the revenue of New Zealand. Nor is this immense advantage purchased at the cost of higher premiums. On the contrary, enabled to work such department more cheaply than a company could do, and desiring to make no profit upon the transactions, the Government is able to undertake the business at rates which, by comparison with those of the most respectable companies, will be found to be even so much lower, that a person having insured in one of the latter, say three or four years ago, might without paying any additional premium, dispose of his policy and reinsure in the Government office, and so avail himself of the security offered, which is a most important element in assurance —a security of investment which places the provident beyond the consequences of risk arising from lax management, or worse, on the part of directors of foreign assurance companies, and of the deception consisting in the parade of large, but merely nominal, reserve funds. A man, if he insures a house or a ship in a doubtful office, can easily transfer the liability to another office, but it is very different with life assurance. Such arrangements are not made from year to year, or to extend over a single venture, but for a lifetime, and to discover at the end of ten, twenty, or it may be fifty years, that the establishment into which the assurer has been paying his yearly premiums is insolvent, means utter loss, and sometimes worse to him, for it may happen that not only would increased age, if he assured his life again, cause him to have to pay in larger annual premiums ; but it would in many cases happen that the life, which was then a good, one, would no longer be so, and would not be accepted on any terms by an Assurance Company. The New Zealand Government are very wisely taking measures to make generally known the advantages and important security afforded by the colony in this matter of assurance. Mr. Macftarlaue lectures again on the subject, we see, this evening, at the City Hall, and there is every reason to hope that this element of insecurity having been, eliminated from the undertaking, the principles of life assurance will come to be thoroughly understood and appreciated, and, as a consequence, acted upon by the colonists of New Zealand. The provident among the working classes at home have not failed to appreciate the security afforded them by the Government savings banks —even though at a sacrifice of interest. To the provident of all classes in New Zealand, the Legislature has afforded the same security in the matter of life assurance, and in the interests of humanity, and of the social welfare of the colonists, we trust to see the inhabitants of New Zealand become equally appreciative of the advantages of the β-overnineiit Annuity and Assurance Office. * ■ TnE final report of the Colonial Industries Committee has, we see, been brought up, but has not yet been printed by the Assembly. The question of protection by bonus is again causing considerable discussion in the community, and the Auckland Agricultural League would appear to have fallen upon the bonus system as an expedient by which to obtain advantages which, under the guise of protection, the colonists would, perhaps, be unwilling to sanction. At the last meeting of the League, one of the members of that institution boldly demanded that the Government should grant a bonus on the production of every article which can be produced in the colony. "We scarcely imagine, however, that the Select Committee on Colonial Industries appointed by the Assembly will be prepared to go to any such length as this, nor is it desirable that it should do so. The whole question of bounties is one requiring careful consideration, and indulged in wholesale means neither more nor less than an extreme protection policy itself, the difference simply being that in the one case the price of every article protected by import duties is raised upon the consumer ; in the other, that he is subjected to extra taxation to give the extra price to the producer in another form. Not that we would be understood to object to the principle of fostering colonial industries by the granting of bonuses; but we would certainly insist on the utmost circumspection being used before committing the colony to any such liability. No bonus should in any case be offered before it haa been shown that it was expedient— that the industry so sought to be protected would, after the first difficulties incident to its establishment had been overcome, be self-supporting, and that there would be a fair chance of its then being able to compete unaided on terms of equal competition with the rest of the world. The community, as a whole, undoubtedly benefits

by the establishment of a variety, of employments, but only when such are in a healthy condition, and do not require to be maintained by continued taxation. Where the industry to be fostered is natural to the colony, and works up an article of local production, the system may fairly be applied, but the utmost caution is necessary to prevent the abuse of what might otherwise be made a public benefit, and the use of the bounty system should on every occasion be preceded by a fair enquiry into the merits of the particular case to which it is to be applied. Under the cover of fostering local enterprises in the State of California, much abuse was found to creep in, a notable instance of which was experienced in the case of the bonus offered for the establishment of mulberry plantations for the encouragement of silk culture, and in many other instances, schemes were launched under State aid, which were purely matters of private profit, and which should have been undertaken independently altogether of such extraneous support. Whenever the public money is to be given away, this will always be the case, and, therefore, as we have said, the utmost vigilance is necessary to prevent abuse. There are, however, directions in which the bounty system may be advantageously applied, and in which the State need not go out of its way to interfere with the ordinary course of private industry, and if the Agricultural League, instead of looking for a general and indiscriminate application of the system, will point out such special cases, it will be doing a public benefit, and may materially assist the operations of the Government.