CONTROVERSIAL COLUMN.

New Zealand Mail, Issue 754, 13 August 1886, Page 20

CONTROVERSIAL COLUMN.

TO OUR MEMBERS OF PARLIAMENT. TO THE EDITOR OP THE NEW ZEALAND MAIL. Sir, —I wonder do our members of Parliament ever think? And, if so, do they think of anything except themselves ? Mr Bryce Is reported to have said there were not three men in the House who understood the financial position of the Colony, and judging from his speech, I doubt that he is one of them. With your permission I will lay a few facts before them to reflect upon. Mr Rolleston has said that our pnblic and private indebtedness amounts to £70,000,000. Mr Reynolds has placed it at £73,000,000, and Mr Turnbull at £84,000,000. I will strike an average of the three calculations and make it £75,000,000. In his Finapeial Statement of 1884, Sir Julias Vogel said that we pay interest at the rate of 5'33 per cent for the public debt, and to put the private debt at 6J is, I think, within the mark. To take at 6 per cent cannot, therefore, be too high, and at this rate I find we have to pay £4,500,000 in interest annually. The money has been borrowed in England, and consequently this £4,500,000 must leave the Colony annually. In addition to this we have to find money for our imports, for dividends payable to the foreign shareholders of all our monetary institutions, for the incomes payable to absent colonists, and also cash taken away by tourists, emigrants, and other people leaving the Colony. To meet these demands we have only our exports, and whatever tourists, immigrants and remittance-men bring in. Mr Turnbull estimated that we receive £500,000 a year through touriatp, remittance-men, &c., and I will accept it as correct. Let me now prepare a balance-sheet :

xuuoa ••• «• • ••• This shows we are going to the bad at the rate of £5,000,000 a year. To provide against exaggerations—although I have taken the figures of members of Parliament—l will throw off £1,000,000, which is equal to interest on £20,000,000. I have also made our exports equal to our imports, which amounts to giving the Colony an advantage of another half million. I have therefore thrown off £1,500,000 in favor of the Colony, and yet there is the enormous sum of £4,000,000 a year to be made up. Now, where are we to get this £4,000,000 a year from ? I say somebody must borrow it. We have borrowed it in the past, as proved by our bank returns. The following returns shows the variations in the amount of coin in our banks, and in our public debt from 1873 to 1883 :

It will be Been from this that during the ten years we borrowed over £20,000,000 public money, and there can be very little doubt but that the amount of our private borrowing,

including local bodies, equalled, if it did not exceed, that sum during the same time. Then I find that while we borrowed during these 10 years £40,000,000, the amount of money in the banks was increased by less than half a million. Where did the balance go ? The answer is obvious. It went to pay the £4,000,000 above referred to. Mark how suitably it fits in ; four mil'ions a year for ten years, 40 millions, jnat the amount that is missing. If I could prove that during these ten years we borrowed 20 millions privately my argument would have been as “ unanswerable ” as Sir Joseph Porter’s “official utterances,” but I think there cannot be the slightest doubt about it. If the money came into the Colony it would have been in the banks ; there is no other place in which it could be put, and the fact that it does not appear in their returns proves that it never came to the Colony, and that it was spent in paying the annual balance against, iib in London, I have, I think, thus proved that we have been paying our debit balance annually out of borrowed money, and it appear to me only reasonable to conclude that we must continue to do so unless we adopt means of equalising our receipts and expenditure. And what is worse the more we borrow the deeper we sink into the mire. Every million we borrow must add £50,000 a year to the amount of money we have to send ont of the Colony. I ask our representatives in Parliament now are they going to continue this, until our credit is stopped ? Would it not be better to change at once, and try to equalise our receipts and expenditure ? The first thing the Government ought to do is to borrow sufficient to pay off all the English mortgages on land and establish in connection therewith a National Bank. In this way the difference between the rate at which the Government could get the money, and the rate at which private people have borrowed it, would be saved to the Colony. This has been estimated at £1,000,000 a year, but I will not vouch for the accuracy of the statement further than that I believe it to be pretty near the truth. About £1,000,000 might be secured to the Colony in that way, but the increase in our exports consequent on farmers having cheaper money would without doubt amount to another million, provided more energetic steps were taken to settle people on the land. By a national bank, therefore, between £1,500,000 and £2,000,000 would be secured to the Colony. But this would not do ; we should still he going to the bad. We must decrease our imports, and that we can do only by putting on protective duties. Every article that can be produced in the Colony ought to be protected to an extent that would enable home manufactures to gain a complete monopoly of the market. I have seen it stated—t think in a lecture delivered in Dunedin by Mr Blair, C.E—that £4,000,000 worth of the goods we import could be easily made in the Colony if reasonable protection were given, Then, if this could be done, we ought to take immediate steps to protect such industries. I refuse to discuss this from a Freetrade v Protection point of view. I do not make the proposal on the ground that Protection is sound In principle. I only suggest it as a means of averting a financial crash, followed by repudiation. Where is the fool who would not resort to protection to avoid repudiation ? I know some of our representatives suffer severely from the Freetrade rabies ; they are pretty nearly as far gone as Sam Weller’s friend, who killed himself to prove that “ crumpets were wholesome.” But snrely the bias given to their minds by reading works on political economy written for and suitable to England, has not over-clouded their understanding to an extent that they would let the Colony go to ruin to prove to the world that Freetrade was sound in principle. The political economy that would suit England might not prove suitable to this Colony. Here, so far as financial matters are concerned at any rate, the conditions are the reverse of what they are in England. The latter country has lent .to the whole world, and a constant stream of gold is flowing into her ; on the other hand, New Zealand has borrowed madly, and every penny she can borrow or make is being drained away. How anyone who is not an arrant fool could be induced to apply the same economic principles in both countries is incomprehensible. The conditions are reversed, and the economic principles ought to be reversed accordingly. I have shown on the authority of statements made by members of Parliament that our total debt is £75,000,000, I have shown that we lose on every year’s transactions £4,000,000, and that hitherto all this has been paid with borrowed money. If my statements are accurate, any reasonable being must conclude that we are rapidly nearing the fatal moment, when the crash must come. I appeal to our represen. sentativea to think over the matter, and to take decisive steps before it is too lAte. If they will not start a national bank now, they will do so when their credit is stopped. Then they will have no gold to back up their notes, and they will fall into disrepute, whereas, if they started them with gold at their back they would circulate at par. America resorted to paper money and protection when she found no one would lend her a penny. Her paper money was at a tremendous discount. If we wait until our credit is stopped also, our paper money will be similarly treated. I have read a speech by one of our representatives, in which he glibly treked of the evil effects of paper money in France, but he neglected to mention that France adopted paper money after her gold had been drained away. If it became known that our banks had not gold we would not take their paper money, but so long as we are assured they have the gold, we never ask any more questions. If we were assured the Government could give us gold if we wanted it, we would never bother them for it, but let it be once known that oar credit is stopped—and then. But I have said enough if anything can be of any use.—l am, J. M. Twomet. Temuka, July 24, 1886.

RECEIPTS. £ Exports ... 7,000,000 Remittances, immigrants, and tourists’ money ... 500,000 Total ... 7,500,000 EXPENDITURE. Imports ... 7,000,000 Interest —. . ••• ... 4,500,000 Dividends, absentees, tourists, &c.... 1,000,000 Total ...12,500,000

Year. Coin in Banks. Public Debt. £ £ 1873 1,311,273 10,913,936 1S76 1,458,019 18,678,111 1S79 1,744,374 23,958,311 1882 1,735,746 30,235,711 1SS3 1,748,330 31,385,411