THE SYDNEY M. HERALD IN REPLY TO SIR J. VOGEL.

New Zealand Herald, Volume XXIII, Issue 7593, 24 March 1886, Page 5

THE SYDNEY M. HERALD IN REPLY TO SIR J. VOGEL.

The Sydney Morning Herald of March 15 has the following :— An article on New Zealand finance, which appeared in this journal a short time ago, appears to have made so much impression on Sir Julius Vogel that ho thought it necessary to reply to it in the course of an elaborate speech recently delivered at Auckland, Some of the local journals, id; appears, had called attention to our criticisms "approvingly," and that was too much for the Treasurer. The citizens of Auckland were accordingly invited to meet hiim at the Theatre Koyal, which, we are told was '•filled to its utmoat capacity" vrith ladies and gentlemen. The scene was theatrical in every sense. "The house was packed from floor to ceiling, and as the curtain rose and Sir Juliu Vogel, preceded by His Worship the Mayor, wheeled himself forward to the table, he was received with cheers." But although the assembled ladies and gentlemen of Auckland had their celebrated financier before them, prepared to unfold another sensational "policy" and to demolish his critics at the same time, the meeting does not appear to have been at all enthußiaatic. There was nothing,, indeed, in the Treasurer's speech to arouse any feeling of enthusiasm. It was apologetio in tone from beginning to end. He virtually admitted the failure of the great borrowing policy he had inaugurated fifteen years ago ; but of course he came with explanations in the one hand and consolations in the other. An enormous debt had been incurred for railway construction; but the railways contemplated by him had not; been constructed, the money having been diverted to other and less productive purposes. "But," said the hopeful Treasurer, "you must not look at the question of your total debt as it stands now. The adage tells you there is no use in crying over spilt milk." This was not all. Agricultural settlement had not made as much progress as it ooghfc to have done. Small farmers were plunged in debt, and needed " small loans" from tho State, while large estates were apparently growing larger every day. Intense depression had afflicted the producing interests of the great South Island, and its population was fast slipping away. Something, clearly, must be done. Were they to stop borrowing or go on borrowing ? Aβ the Treasurer put it: " Are you going to leave thie colony to be the prey of a few large owners, the great mass of tne people praying only to find their way to some other colony ? That is the question before you ; that is the queation the colony will have to decide."

The picture as drawn by Sir Julitte Vogel, in his efforts to carry the Auckland electors with him, was still more darkly coloured than that which ve had painted, and of which he thought it necessary to complain, fiat the depth of its shading cannot be realised from the mere outline we have given. The speech abounds in revelations for which we were hardly prepared, and which tend to show that the position of affaire is much less hopeful than it appeared to lie. It is startling to learn, on his own authority, not only that the great borrowing policy of 1870 had proved a failure in its essential features, but that the failure itself was due to causes over which the Government could exercise no more control in the future than they had done in the past. Still more startling is it to learn that in the face of these deplorable resnlte, Sir Julius is now urging the Auckland electors to support him in another policy of the same kind, eren more impracticable and unpromising than the first. The secret of this reckless dealing with the prospects of the colony may be easily explained. Sir Julius was placed in office a short time ago by the Otago and Canterbury votes for the avowed purpose of initiating another borrowing policy. The South Island, formerly the most prosperous part of the colony, has for years past been suffering from extreme depression of trade in all its branches. So far, however, from being warned by the results of the original policy, the South resolved to have another era of inflated prosperity at any cost ; and accordingly the construction of two great Hneß of railway—the Otago Central and the East and West Coast lines—is regarded there as the only means of averting ruin. But the people of Auckland—which of late years has enjoyed a large share oE prosperity owing to its commercial interests —naturally look .upon those lines as very doubtful speculations, and nearly all the Auckland members in the House of Representatives are opposed to their construction. The division of opinion on this subject between North and South is strongly marked. To secure his Government in office, the Treasurer finds it necessary to secure the Auckland votes, and hence the speech to whijh we have referred.

But as votes cannot be obtained without some equivalent, the Treasurer came prepared with one in the shape of a proposal for securing the construction of the North Island Trunk Railway from Wellington to Auckland. A loan for the construction of that line has been voted, but it seems there is imminent danger—especially while the Auckland members are in opposition—of the money being expended on other purposes, as in other cases. A curious specimen of finance as it prevails in New Zealand appears in the following passage :—"I have provisionally arranged in such a manner that we shall be able to borrow on short-dated debentures until October newt, in anticipation of the loan; so that it will be possible, if Parliament meets early and chooses to take the step, to avoid negotiating that loan except as required for the express purpose for which it is intended ; and it will be further possible for us by legislation so to ear-mark a loan that in future it cannot be expended for other purposes than those for which it was intended." We wonder what opinion would be formed by English capitalists of the singular system of finances revealed in this sentence. A loan voted by Parliament for a specified purpose may be appropriated to purposes never dreamt of when the Act was passed. Sir Julius evidently has his doubts about the morale of this proceeding, and in order to satisfy the Aucklanders that they will not be stripped of their Trunk loan as soon as it is negotiated, he proposes to "earmark " it like a sheep to prevent its diversion to other purposes. Sir George Grey, we observe, does not seem to think much of this ingenious process. He referred to it in a very irreverent manner at a public meeting which he addressed a few days after the Treasurer's speech was delivered. "Wβ are told that loans are to be ear-marked, Nonsense!. Do you believe that if an Act was passed now, and you were told that the loan had been ear-marked, a Minister who had a majority in the House and who was anxious to hold office at any cost, if he found by cutting off the ear and getting rid of it, he would not do so ? Do you not think he would seize the loan and clip both ears off?" It must be confessed that the probability lies in that direction, so that the Auckland Trunk loan lies in jeopardy, and is likely to remain - so. Its ultimate disposal may depend not so much en the ear-mark as on the voting of thf Auokland members. -