NEW ZEALAND'S POLICY AND PROSPECTS.

New Zealand Herald, Volume XXXI, Issue 9615, 13 September 1894, Page 6

NEW ZEALAND'S POLICY AND PROSPECTS.

THE BUDGET PROPOSALS.

OPINIONS OF THE HOME PRESS. [FROM our own correspondent.] London, August 11. In the opinion of the Glasgow Mail, "New Zealand seems to offer a very unpromising prospect to emigrants just now." After referring to the unemployed difficulty in Dunedin, Christchurch, and Wellington, it says, " Altogether the industrial outlook is a very

gloomy one, as business is dull in all directions without any prospect of improvement in the near future." A gloomy view is also taken by the Sun and by the Investor's Review. The former regards the Budget borrowing proposal as " imprudent and unsound/' being certain to " cause inflation and end in disaster." The Investor's Review asserts that the New Zealand Government policy has been "inaugurated in haste and despair," and that the farm mortgage scheme is for " the relief of the mortgage companies which have lent double, treble, quintuple the value of the land upon properties all over the country." The 3ame writer declares that as matters are tending the New Zealand Government will become the universal trader and cultivator, and that " the 'pub' and the smithy and the grocery store will be run by it in every village." He thinks the New Zealand Government is entering on an experiment of State Socialism which might be extremely valuable to the world as an awful example did it not run such danger of assuming the aspect of a "perpetual 'knock - out' sale of bankrupt stock." English and Scotch farmers " may find some consolation," the Dundee Courier thinks, "In the fact that the New Zealand agriculturist is being sc severely hit by the competition of the grsat wheat-growing countries, that he, too, is being driven out of wheat-growing. The crop does not pay in New Zealand any more thai: in England." The Standard also comments on the fact that "In New Zealand the production of wheat has been suddenly reduced to a quantity barely sufficient for the colony's consumption. It remarks, "The cause of the great decrease of wheat-growing in New Zealand is unquestionably the lowness of prices, the crop being regarded as unremunerative, although the yield is usually much greater j than in other colonies." ] 'J he Times deals very cautiously and by no ! means adversely witn the New Zealand j Budget proposals. After observing that j "From New Zealand the announcement of fresh loans is frankly made," the Times adds, " It does not follow that the tact is to be deprecated," and says that " The wisdom of every fresh loan should be examined on its merits." Proceeding on the lines thus laid down, the Times goes on to examine the only item which is as yet clearly stated in the ?able messagesthe proposal to raise a million and a-half for the purpose of lending to farmers at a low rate of interest. It says : —" .Mr. Ward is initiating no new departure. The system of land settlement with State assistance has been put to the test of experiment in New Zealand, anil has been so far successful that the late Premier (Mr. Balance) has been credited, justly or unjustly, with the conception of a gigantic scheme of borrowing up to the limit of thirty millions for the purpose of re-lending in small sums to settlers " Can this be true about Mr. Ballance's big scheme? It seems a "large order !" But the Times goes on to analyse the results hitherto obtained from State-aided village settlements, and to.declare that the figures must be regarded as. satisfactory, and that they contrast effectively with the results of protected industries in Victoria. Observing that the principal obstacle to the extensive settlement of New Zealand's fertile lands is the lack of capital, the Times accepts Mr. Ward's proposal as an attempt to remove this obstacle, and says that the New Zealand Government, in venturing to borrow in the English market for the purpose is " leading the way more boldly than the other colonies." Reserving final judgment upon the scheme until full details shall have been received, the Times, nevertheless, remarks : —"lf the movement prove success- . ful, it will be of an importance which can hardly be exaggerated, not only to the colonies concerned, but also to the rising generation of Great Britain. It seems, indeed, to carry with it something not far removed from the settlement of our most pressing social question. But precisely because it is so important, it is necessary that it should be conducted with the utmost caution." In the opinion of the Scotsman " the course of financial affairs in .New Zealand ■will require to be closely watched by British investors.'' In support of this view it quotes the successive utterances of the present Government from June, 1891, up to February of this year, all containing the strongest and most specific assurances that no fresh borrowing was contemplated. With these assurances it contrasts the recent actions of the Government as expressed in the recent Budget and as exemplified in the Bank of New Zealand guarantee. "The last mentioned operation (says the Scotsman) involved a mystery which has not yet been fathomed. When the news first reached London we pointed to the total inadequacy of the official explanation." But it refrained, it says, from throwing light on the matter lest the issue of the stock should be jeopardised— an issue which had confessedly saved the colony, and for that matter the whole of the Australian colonies, from a fresh and terrible crisis." Summing up the whole business, the Scotsman proceeds to say: "The recklessness of such financing is incredible. . . . The Government are themselves committed on a huge scale to the very same class of business which for the second time landed the Bank on the edge of a precipice. The whole affair must present itself as a financial muddle of the worst kind. . . . The Government are about to raise £2,500.000 to carry on a land-jobbing business, and have made themselves responsible for £2.000,000 lent to the Bank. . . . When and where is that process to stop? British capitalists and investors, both large and small, have an enormous stake in the colony, and it is quite time that the Government should be warned before it is too late that if they go on in th* course they have now marked out for themselves they will wreck their credit and the colony itself into the bargain. The latter cannot bear the burdens which are being imposed upon it, and if these continue to be piled up in the way proposed, a breakdown will sooner or later be inevitable." Commenting on the same subject, the Glasgow Herald says:"New Zealand seems to have narrowly escaped from a banking crisis, even more disastrous than that experienced on the Australian continent, by the interposition of the Government." It adds that " the true inwardness of the New Zealand Government in this matter has no'; been officially revealed, but the motive was probably a mixed one." This motive, the Herald thinks, was partly to borrow under ''cover of the Bank, and says that as far ns New Zealand is concerned there is "doubtful wisdom" in " converting a mercantile establishment at one coup into a State institution." Ic is the opinion of the Manchester Guardian, formed on the authority of the New Zealand Hekald, that the action of the New Zealand Government in giving postal notes an unlimited time-currency is substantially tantamount to the establishment of a State paper currency, the convertibility of which is not guaranteed, and that the proposed £500,000 worth of debentures may also become a species of currency, and that by such means as these the Government may. get hold of a good deal of money without openly borrowing. These" (says the Guardian) "are some of the consequences of the dangerous credit doctrines which are now being preached in defence of the violent contraction of the 'hard-money' of the world. Their effect in New Zealand will be to increase greatly the opportunities of the Government for plunging into debt." Yesterday's Fairplay — that not always justly named financial organ—thinks that colonial government securities are " unduly high" just now, and that the market for these " would quickly go all to pieces" in the event of any reaction. It thinks further that " the sharpest fall when it comes will be in Victorian and New Zealand issues," and that " as regards the last named colony the position is undoubtedly becoming every day more grave." Dealing with the scheme for lending to farmers, Fairplay says —" It is a splendid project as a means to snatch the political support of the distressed farming interests. The partv that will lend most freely and most recklessly on the smallest margin of security, is the one that will remain longest in power, as will be also the party which will snow the most leniency to defaulting creditors." - " But," it asks, " will British investors hand over their money to further the working of what will be nothing more nor less than a vast machine for political corruption, which must break down the moment its resources run dry and fresh means for keeping it going cease. The private savings banks are to be made to hand over their money in aid of this business."