AUSTRALASIAN PUBLIC FINANCES.

New Zealand Herald, Volume XXVI, Issue 9370, 21 May 1889, Page 6

AUSTRALASIAN PUBLIC FINANCES.

[from our own correspondent.) London, April 5. A paper on this subject was prepare d by Mr. William Westgarth, for tho monthly meeting of tho Royal Colonial Institute, on March 26, and in that gentleman's absence, through indisposition, was read for him by Mr. O'Halloran, the secretary. The paper had been looked forward to with considerablo interest, by reason of the standing of tho author in the city, and his eminence as an expert in matters of Australasian finance ; but, on being read, it was found to be lacking in Mr. Westgarth's usual vigour and directness. This is perhaps to be accounted for by the fact that he was suffering from severe debility during the time of its composition, and was unable to hunt up the array of statistics necessary to elucidate some of his arguments. Nevertheless, the paper contains many points which are worthy of serious consideration by colonial statesmen. The leading idea is that tho various colonies should throw their loans into one common three per cent, stock, and should not borrow in the future save at that figure ; also that they should issue their loans at discount rather than at par, inasmuch as the public prefer a discount stock to a premium stock. This means, says Mr. Westgarth, that investors generallj', and particularly trustees, dislike to pay primiums for stocks, as they diminish capital, but prefer to buy stocks at a discount, as they thus, nominally at least, increase tho capital. The market, also, in their speculative dealing instinctively regard a discount stock as more likely to advance when under "par," or the value of 100, than a stock which has already passed that goal. From these facts Mr. Weatgarth draws the inference that a discount stock is, as a rule, worth relatively more in the market than a premium stock. Mr. Westgarth strongly blames the issuing of colonial loans in diverse forms, that is with different dates and places of interest payment. This, he says, confuses the minds of the investor and in many instances detracts seriously from the value of the stock. New Zealand, he declares, has sinned most in this injuriously negligent way, having had different loans with half-yearly interest dates in every month of the year, and some few of them in even the middle together .with others at the beginning of the same month. But the desperation of her case, causing her at last to feel her disadvantages, led Now Zealand to set the first example of a consolidation of tho small and varied stocks into one stock of perfect uniformity. Mr. Westgarth recalls with pleasure that he helped Sir William Fitzherbert in this important movement when he visited London from the colony 20 years ago in order to effect it. Mr. Westgarth has also a good word for New Zealand, in that, together with Victoria, it was the first to depart from the vicious practice of treating money derived from the sale of land as reveuue instead of capital. Victoria at first reserved for eorae years £200,000 yearly from land proceeds to be applied in some way towards the colony's capital account, but latterly this has been modified into a reservation of the proceeds of the public auction sales, which average a somewhat less amount, as the colony's available lands are already very largely sold on-.. New Zealand, since 1879, has reserved the whole amount of land proceeds to be laid out in land surveys and in reproductive or at least permanent and useful works. Mr. Westgarth likewise praises the colony for having, in spite of times of depression, shown exemplary liberality in the education of her children, the vote for the current year, ISSS-S9, being as much as £379,000, for a population of tt'2o,ooo. New Zealand, he declares, has thus developed an educational programme which might fit every youth of the society to till any of its positions up to the very highest. Of course Mr. Westgarth is a strong advocate for the investment of trust funds in colonial securities. He thinks that these stocks would become even more acceptable than they now are were the loans not only converted into one common stock buc made irredeemable. He does not take a desponding view of the present unwillingness of the Government to sanction the investment of trust funds in these securities, but thinks that, when Mr. Goschen has finally completed his great conversion scheme, he will be prepared to concede thetrusta' status to Colonial stocks. The diecussion on the paper, which was very animated and well maintained, turned principally upon the fact that the colonies had laid out nearly all the money they had borrowed in reproductive works, thereby creating available assets which fully balanced the extent of their indebtedness, and upon the strong case which existed for the sanction of the investment of trust funds in colonial stocks. Sir George BadenPowell quoted some interesting figures in this regard As an instance of the soundness of the investment he said that nine tenths of the money which the colonies had borrowed had been spent in developing the resources of the country, and only a small portion had gone in work? which were not directly remunerative. The total indebtedness of all the colonies stood at something like 230 millions sterling. Of that sum about 150 millions had been spent in railways, 60 millions in harbour worka and docks, and 10 millions on emigration. There was no security in the world which offered a better prospect of permanenceand profit than Colonial Government stocks, and it was additionally imperative that they should be made available for the investment of trust funds, because these latter were increasing in the mother country in a very rapid ratio, while at the same time the two great funds in which trustees were allowed to invest their money, land and consols, were rapidly decreasing in value. During the past fifteen years the amount of money left at death had increased from 120 millions to 180 millions sterling. The great insurance and trust companies were also increasing the sums which they must put out at deposit, and altogether there was now an increase of at least 200 millions in the money to be invested by trustees. Therefore, seeing the trust funds were increasing so fast while the opportunities of investment were decreasing, those who were beneficiares under trust funds would suffer severely unless gome new channel was opened for them, and that channel was to be found in colonial Government securities. Sir Francis Bell expressed his approval | of some words which had fallen from Sir George Baden Powell as to the absurdity of speaking of the securities of the colonial Governments as their " debts," when in reality they were simply capital. The Agent-General congratulated Sir George on being the first to draw public attention to the greatdifference there was between money invested in reproductive works and what usually went by the name of debt. There was one other point of immense importance which had never yet been referred to itj connection with colonial borrowings, and that was the vast difference between a community which borrowed money within its own borders and from its own citizens, and one which hod to go outside its boundary for the receipt of capital. If we could only lift our minds to a higher sphere, and look upon the investment of money in any part of the Empire as something which tended to the profit and advantage of the Empire as a svhole, we should sec that as regards the useful employment of the great accumulation of English wealth there was practically no difference between investments in Australia and investments in Yorkshire, and that a railway constructed in the one was as much to the advantage of the Empire at large as a railway in the other. If that could be done a good deal of the bugbear which was held up to debar people from investing money in the colonies would be dispelled At the time when the first Victorian railway was being inaugurated, he and Mr. Justice Chaplin made a series of calculations which showed beyond all doubt that the population which was to be served by the railway were paying more for the transport of the necessaries of daily use than would have sufficed to pay the interest on the cost of making the railway. The results to England of opening up the colonies were as beneficial as those which accrued to the colonies themselves, and the employment of capital in colonial enterprise was for the advantage of the Empire at large. Sir Francis objected to the patronising way in which Mr. Westgarth had pointed out the errors of i colonial statesmen, and hinted that the

latter did not want Mr. Westgarbh to teach them the elementary doctrines of finance Mr. West-garth's point as to the colonies floating their loans at a discount, had been fully considered in New Zealand, but they had determined that they would not lay upon posterity the burden of having to pay £100, when the colony had actually received less than that sum. Sir George Bowen addressed the meeting as the representative not of one colony but of five, and he " endorsed generally the remarks of all the previous speakers" This showed a good dea'l of breadth of view and catholicity on his part, because the previous speakers 'had differed very considerably from one another. But Sir George's object in speaking was not to give hie views on Australasian finance so much as to bring out tho fact that the last letter written by the late Mr. W. E. Forster was addressed to him, and that in it the deceased statesman " congratulated me on throwing into the scale of Imperial Federation the majestic weight of my unrivalled colonial experience." Mr. Forster's vein of quiet humour did not desert him even in his closing hours. Tho sensation of the evening was supplied by a South Australian Member of Parliament, Mr. Hawker, who fiercely attacked the financial policy of hirf own Government, and dealt a trenchant blow at the reproductive works theory which it is so much to the interest of the colonies to encourage. There did not seem to be any other representatives of the goody goody co.'ony present. Sir Arthur Blyth had been exnee ted to attend, but was engaged elsewhere, so the defence of South Australia had to be undertaken by Mr. Speight, tho Chief Commissioner of Victorian Railways, who roundly rated Mr. Hawker for " fouling his own nest" and speaking ill of his colony. Mr. Billinghurst, the manager of the London and Westminster Bank," addressed a few words of warning to the colonies on a point connected with their borrowings, which, he thought, had been overlooked. The interest on the 100 millions of Australasian debt amounted to ton millions per annum. As yet the pressure of blue payment was not felt, because the colonies did not have to remit the money, there generally beinsr, by reason of frequent borrowing, sufficient sums standing to the credit of Colonial Governments at the banks in London to pay the interest on their debts. But the time must come when these borrowings would cease, and then the intereston the debts would have to be transmitted from the colonics. This could only be done by means of the export of produce, and it seemed to him that the Australasian export trade was not enough to cover so large an extra payment as ten millions per annum. It was, however, pointed out that Mr. Billinghurst left out of account tho undeveloped resources of the colonies, and that the contingency which he feared, namely, that a time would come when there would be no money standing to the credit of the colonics in London was not likely ever to arise, because the colonies were so frequently applying to the London Slock Exchange for capital to float private enterprises. Mr. Braddon (Agent-General for Tasmania), Mr. George Beet ham, of New Zealand, Mr. Frederick Young, Mr. Dangar, and Sir Charles Nicholson, the chairman, also took part in the discussion.