THE HON. T. FERGUS' SPEECH.

Otago Witness, Issue 1898, 19 June 1890, Page 18

THE HON. T. FERGUS' SPEECH.

AN EXPLANATION.

The following communication from the Hon. T. Fergus appears in Monday's Daily Times :—

There has been so much misconception of what I said at Queenstown and, I am sorry to Bay, so much misrepresentation, that I feel it due to myself and to my constituents that I should take some notice of the criticisms on my recent speech. I took up four large questions, and dealt with them as fully as the time at my disposal permitted ; but in order to place them clearly before the people in all tljeir bearings on the settlement of the country and the finances of the colony, eaoh question is of sufficient importance to have been made the subject of a separate address. lam convinced that the erroneous impressions which have been created, and the criticisms so freely indulged in, are due to the fact that sufficient careful consideration has not been given. I may therefore be excused if I again allude to these questions in order to emphasise my expressed opinions, and I have uo doubt that I Hhall be able to furnish sufficient data to prove th'-t ihe attitude taken up by me, and whioh I still maintain, is, so far as the facts are concerned, absolutely unassailable. The questions I refer to are those of (1) roads to open up Crown lands in unsettled localities; (2) the acquisition of Native lands for settlement purposes in the North Island; (3) future borrowing for local purposes; (4) the settlement of large estates held by mortgage companies and banks.

BOADING OHOWN AND NATIVE LANDS.

The modes of dealing with the first two which I proposed were essentially the same. They were to "road" (he lands and to purchase the Native country by the aid of debentures issued and payable in the colony. I think it will be admitted on all hands that it is one of the first duties of the Government to see that the country is opened up, and well opened up, for the settler. This cannot be done without an expenditure of money. I will instance a district well-known to most of us, that is the district lying between Catlin's river and the Waikawa, from the east of the railway line running from Balclutha to Mataura. Within the limits I have now mentioned almost the whole country is still in the hands of the Crown ; but it is also covered for the most part with dense bush. It would be the height of folly to put small settlers, or, indeed, settlers of any sort, into this bush without giving them the means of communication with the outer world. If this estate were in the hands of a private individual or company, before they sought to dispose of it to anyone they would open it up by through and good roads, or provide other means of transit. The question arises : Where are the funds to come from to do this ? The loan money is all but exhausted, and in order to push, as I think should be done, a main macadamised road through the heart of this forest, a clearing on each side of the road to the extent of one or two chains, to allow the sun of Heaven and the wind to come in, and keep the road im a proper condition, would cost £30,000. But it would open up an estate of 80,000 acres, and with the progress of the road there would be a progress of settlement. I am told that the issuing of debentures within the colony is an immoral proceeding. What is the law now ? Clauses 37 and 38 of the Government Loans to Local Bodies Act say how funds are to be provided by the Colonial Treasurer. Clause 37 gays: "The Treasurer may, in eaoh financial year, grant loans to local bodies under this act to such an amount as shall be appropriated by Parliament for that purpose. If no sum be so appropriated in any financial year, the Treasurer may make loans under the authority of thi> act in such year to a total amount not exceeding £200,000, and such amount shall be in addition to any loans agreed by the Treasurer to be made previously, but not yet completed." Section 38 says: "Subjeot to the provisions of this act, and for the purpose cf providing the money bo make loans to local authorities, the Treasurer, as often as occasion requires, and upon being authorised to do so by the Governor-in-Council, shall have and may exercise the following powers, or any of them:—!. He may in each financial year borrow any such moneys from the public account or from any fund in such account under the control of the Treasurer. 2. lie may borrow suoh moneys entirely from one fund in such accoun?, or partly from one such fund and partly from another, or may borrow the whole or any part of such moneys from any bank or monetary institution. 3. As security for the moneyj borrowed he may give scrip in such form as maybe prescribed by theGovernor-in-Council, and agree to redeem such scrip after he receives debentures from local authorities under this act. 4. He may sell all or any part of any debentures received by him from i local authority for a part or the whole of the time they are current, with or without the option of redeeming them before they are due. No such debenture shall be sold at such a price as to produce to the purchaser an interest of more than £5 per centum on the price paid. 5. He may borrow money on security of such debentures, and may hypothecate or pledge the same accordingly. 6. He may issue fresh debentures representing the whole or any part of such debentures. Such debentures ishall bear intere-t at the rate not exceeding £4 per centum per annum, and shall be current for not loug* r than 25 years from the issue thereof, or he may issue debentures with a currency of not longer thau five years, bearing interest at £5 per centum psr annum. Any soch debentures may be issued with or without taking power of redemption earlier, at the option of the Treasurer, and may be made payable in or out of tho colony, and at such date as he thinks fit, or by means of a sinking fuud, or by notice." It is an absolute fact that under the Government Loaus to Local Bodies Act the Colonial Tru-asurer is empowered to borrow annually from any fund undur the direction of the Government, or, for that matter, from any private individual or company, any sum up to £200,000, paying for this money in debentures issued in tbe colony ; these debentures to bear interest at . from sto 5 per cent. The Government have borrowed considerably under this act, and have provided local bodies with moneys, and are providing them now with funds raised by the sale of these debentures My critics do not object to bor rowing under the Government Loans to Local Bodies Act, but, on the contrary, take the fullest advantage, if it, as I will show later. They object, however, to any of tho money so borrowed being applied ti tho outfim.g up of the Crown estate. Umlor " Tn-' Ro-i.U and Bridges Construction A2t 1882 " the colony had borrowed from various funds and granted and lent to local bodies over £400,000. The provisions of this act were that the local bodies c >u!d obtain for the construction of main road? any sum they required, under certain Btipulaiious. paying back in 10 yearly instaloients only 25 per cent, of the money so borrowed ; or they could obtain money for district roads, returning the same in full with interest in 15 yearly instalments of 9 per cent. This act was repealed, and the Government Loans to Local Bodies Act passed in 1886. But in order to afford relief to a number of local bodies who had borrowed under the Roads and Bridges Construction Act, a special clause was inserted to the effect that the loans under the

Roads and Bridges Act could be converted into a a debt under the Government Loans to Local Bodies Act by computing actuarially at 4§ per cent, the then value of the original debt. The benefit of doing this will be apparent, especially to those bodies who had borrowed for the construction of district roads, because, instead of having to return the whole sum with interest, as was contemplated by the Roads and Bridges Construction Act, they were let off by the payment for 26 years of 5 per cent, on the amount of their debt as computed in the manner I have described. By taking advantage of this provision £110,550 was converted into a debt under the Government Loans to Local Bodies Act. This debt was computed, as I have said, at £4 10s per centum of the then value, which reduced it to £87,974. Since that time we have borrowed and issued £259,325. Clause 13 of the Government Loans to Local Bodies Act says: "The Treasurer shall not lend or agree to lend, in any one year, to any of the local authorities hereinafter mentioned, a larger sum than that set opposite the name of eaoh local authority, that is to say — to a county council & sum exceeding £6000; to a road board a sum exceeding £3000; to a town board a sum exceeding £300 ; to a rirer board a sum exceeding £1000." There is also provision for lending sums of money to boroughs under 4000 inhabitants. The objects to which the money so borrowed by the local body can be applied are set forth in clause 2 of the act, and are as follows :— " (1) A road, bridge, and a tramway, the property of one or more districts, (2) Irrigation works or works for the supply of water to a district. (3) Waterworks for the supply of water within a district or districts, and for the storage and distribution of water for mining purposes, including 'water races' within the meaning of any act of the General Assembly relating to mining. (4) Drainage works for the drainage of any district or districts, or part thereof. (5) A wharf or jetty in a navigable river or arm of the sea, works for the protection or improvement of rivers, and any worka which may be performed by river district boards. (6) Gene- , rally all works necessary for the construction, use, protection, or control of any such public work; and all expenses of engineers and assistants, and of supervision in the construction of the same." As I have said, £259,326 has been advanced to local bodies under the provisions ot the act, and the distribution of it is rather interesting. I find that there had been issued up to February 1889, as under : —

It will be seen then that under the provisions of this act there is, in the first place, ample power for the Government to borrow, aud local bodies can obtain from the Government money on easy terms. Ido not wish for a moment to say that I am finding fault with the local bodies who take advantage of the very liberal terms of this act, but I fail to see where the alleged immorality comes in of borrowing money to construct roads through Crown lands which are i lying waste and useless at present, while it is considered moral, on the other hand, to give money on such terms to local bodies in settled districts. Our treatment of the waste lands of the Crown should be as liberal as our treatment of the more favoured and settled parts of the colony. There is nothing, therefore, unfitting in the proposal which I made to apply a portion of this money we are now empowered to raise by debentures to the " roading " of the waste lands of the Crown. The second point is

THE PURCHASE OF NATIVE LANDS. Some of my criticß have said that, while entirely agreeing with the acquisition of Native lands, it would be better to go at once to the London money market and obtain the cash at the lowest possible interest ; and one speaking recently said that the moneys still in the hands of the Crown for the construction of the North Island Main Trunk railway should be applied to the acquisition of these land*. To the first I reply that, according to the terms upon which we obtained our loan in London in 1888, we are precluded from going for any further accommodation before March 1891 — that is, supposing we were willing again to go on the London money market. My answer to the second contention is that by the terms of the North Island Main Trunk Railway Act we cannot expend moneys out of that loan except within the railway area ; whereas we have vast quantities of laud being offered to us now in the North Island outside of that limit. At a meeting held in Napier on Thursday, the 29bh May, there was a series of resolutions passed. I will quote from the speech delivered by Mr Ormond He said: "Looking at the question from a North Island point of view, the question was : Had they land to put the men on ? Certainly not. The commissioner would tell them he had not land that would last over another 12 months for those in the colony at present applying for it. He meant land suitable for persons to go on. If they wanted to increase their population they must get land. He had drafted a resolution asking the Government to purchase some of the large Native blocks of that land. There were twelve million acres lying waste and contributing nothing to the taxation of the country. His view was that some of this land should be acquired. There was considerable talk of purchasing land at present in the possession of private owners. He admitted that was necessary and right, but before that should be done waste lands should be secured, for the other was at any rate aiding in some measure the progress and prosperity of the colony. He accepted the first part of the resolution moved by Mr Miller. His next clause which he (Mr Ormond) had intended to move was with a view to provide land for settlement iv the North Islaud The Government should endeavour to acquire from the Native owners as much as possible of the large estate held by them, and most of which is lying waste and unproductive. Most people would agree with that clause. They had a most liberal laud law, and the bulk of the land was taken up on perpetual lease which was not perpetual lease at all, for the freehold could be acquired at any time. List year the land taken up was double that of the previous year. His next clause was to the ."ffect; that with the object of facilitating settlement on rhe land provision should be made to expedite the survey of lands and opening them for settlement, and that an amendm 1 nt should be made in the land laws to prevent those who were not houa Me settlerß from acquiring land. Hia next clause wa3 that the Government should be asked to assist iv the introduction of farmers, -»nu tl at special settlements should be formed. IE the Native lands were acquired there was no reason why farmers in the old country should not associate together and take up large blocks jointly. His next clause was to assist the Agent-general, Immigration bureaux should be

established in Great Britain for the purpose of giving publicity to the liberal land laws in force in the colony, and generally to assist in the promotion of immigration to the colony. His next clause was that the resolutions should be submitted to the Government." Admitting then the necessity of acquiring this land, and realising the full force of Mr Ormond's remarks, the question arises : Where then &cc we to get the funds to acquire the laud which has been so freely offered ? Are we to allow it to drift as it did in the past into the hands of speculators, and to allow them to form large estates to the detriment of the small holders ? Or should we endeavour to acquire it at as small a cost as we can for occupation under those land laws which Mr Ormond so truly says are liberal? If it is not immoral to borrow money to leud to local bodies in the colony for " roading " lands in settled districts, why should it be immoral to borrow money to open up our own Crown estate or to acquire a further and more valuable estate for the occupation of the people ? Are we to ait quietly and tamely by and see these lands slipping from our grasp while we have the power to acquire them and can get a larger selection of country for the intending settler? Nay, more than that, we can acquire such an estate as will induce a stream of most desirable immigrants, small farmers, and men with capital to our colony. Briefly, then, my proposals were that, as there had never been occasion in any one year to raise the full amount (or even half the amount) authorised to be raised by the Government Loans to Local Bodies Act, power should be given to the Government to take the balance and apply it to the " roading " of unsettled Crown lands and to the acquisition of Native lands. I take it that both of these objects are as essential to the assistance of settlement as the makingof district roads. With reference to the

CONSOLIDATION OF LOCAL LOANS, if the subject were not one of such moment, it would be amusing to hear people say there is a danger to the country in enabling local bodies to obtain funds for carrying on works at a more reasonable rate than they new do. I have been charged with wishing to take over at once the whole indebtedness of the local bodies throughout the colony, and practically add it to the colonial debt. I quote the actual words which I uttered. They are as follows : — " I do not for a single moment advocate that increased facilities should be given to local bodies to borrow; nay, indeed, I am clearly of opinion that the severe depression which we have ex» perienced, and through which I hope we have passed, was in a great measure contributed to by the fact that we, as a colony and as local bodies, and, for that matter, as private individuals as well, have borrowed far more largely than we ought to have done ; and we have thus been reaping our reward. Still, Ido say that it would be folly on the part of the country to allow the local bodies to be bled one by one to the exteut of 1, 2, or 3 per cent, per annum more than they would have to pay if their loans were put on a more satisfactory footing, and that it is THE DUTY OF THE GOVERNMENT TO SEE THAT SOMETHING IS DONE, IP IT CAN BE DONE, IN OHDEH THAT IN ANY FUTURE BORROWING WHICH MAY TAKE PLACE WHEN THE LOANS FALL DUE THE NEW LOANS SHOULD BE ISSUED UNDER SUCH CONDITIONS THAT THE LOCAL BODIES WILL BE ABLE TO OBTAIN THE ACCOMMODATION BEQUIBED AT MORE SEASONABLE BATES THAN IN the past." AU I proposed to do was to enable, by a process of amalgamation, these local bodies to oVain money at a less rate of interest when theih loans fell due than they are now paying, and in the interests of settlement. Is this a new departure ? I think it is not. We have been told that the Government Loans to Local Bodies Act is quite satisfactory. No doubt it is in many parts. Let me give an example ; and I take this one because, of it 3 kind, it has availed itself of most of the provisions of the act. The Manchester Road Board borrowed or took over from the Oroua Connty, under the Roads and Bridges Construction Act, £23,230. Of this sum they converted £20,593, under clause 29 of the Government Loans to Local Bodies Act, into a debt of £16,238, and have Binae borrowed £8428, so that, it must be admitted, full advantage has been taken of the act by the Manchester Road Board. Of the £20,593 converted as above, £18,033 was raised for the construction of district works, and had accordingly to be paid off by 15 annual instalments (three of which were repaid before conversion) at the rate of 9 per cent., whilst the balance being for main roads only, 25 per cent, required to be paid. It will thus be seen that tho conversion resulted in a clear saving to the board of £4355. But this was not the only saving effected, for out of the annual payment of 5 per cent, provision is made for 1 per cent, to be placed to a sinking fund, leaving 4 per cent, for interest on the loan. Now this 1 per cent, of sinking fund on £16,238, invested for 26 years at 4 per cent, compound interest, amounts to £11,545, so that the liability of the board was altogether reduced by £9048. Now, I ask, where is there any fairness in giving such favourable terms to one local body and refusing them to another simply because the one borrowed from a private individual, a company, or trust, and the other got its funds direct from the Government? What I contended for, and what I still hold, is that each one should be put on the same footing, and that when these local loans raised outside of the Government fall due and the debentures mature, they should be allowed to take advantage of any privilege which is extended to other local bodies of a similar character existing in the country.

HOW TO DEAL WITH THE LOANS of local bodies is a question which must be faced before we can have any improvement in our local government. It underlies the entire reorganisation of the local government of the colony, and is the major question in the amalgamation of our counties, road boards, and in the extinction of useless municipalities. The last point

THE SETTLEMENT OV ESTATES held by mortgage companies. Mr Ormond is reported recently to have said that " there was considerable talk of purchasing lands at present in the possession of private owners. He admitted that it was necessary and right now." I never went so far as Mr Ormond is reported to have gone ; but what I did say, aud what I still firmly believe, is that the same clauses which exist in the charters of our English hanks and other banks trading in the colony should exist in •all, and that when these monetary institutions or mortgage companies take over estates they should be compelled to part with them at as early a date as possible. If such a clause had originally been in the charters of some of our oolonial institutions, I venture to say that these institutions would not have suffered so severely as they have done, and they would have been more careful of the advances which they made to individuals — advances which, instead of bringing any profit, brought loss to them and ruin to the people who borrowed the money.

A great deal of curiosity is felt as to whether the announcement that the Governor had given up his seats in St. Paul's Church, Wellington, is to be taken as a corroboration of the statement that he intended to retire at an early date. It appears 10 seats are always reserved for the Governor, but in addition to these Lord Onslow has paid for five more for the use of his household. It is the latter which he is giving up.

North South T f . Island. Island. J - OtalCounties ... £49,777 £48,940 £98,717 Koadßoarda ... 59,907 1,500 81.407 Ktver Boards ... 1,750 4 SSO 6,300 Boroughs ... Nil 1,600 1 600 Town Board* ... 1,200 Nil 1,200 Totals ...£112,634 £56,590 £169,224 Since February 1889, an additional sum of £90,101 has been advanced, as under : — Counties ... £34,320 £7.075 £41,395 Koad Boards ... 40,606 Nil 40.006 Elver Boards ... 845 5,055 5,900 Boroughs ... Nil 1,600 1,600 Town Boards ... 600 Nil 600