SIR JULIUS VOGEL ON NEW ZEALAND FINANCE.

Taranaki Herald, Volume XXIX, Issue 3760, 15 June 1881, Page 2

SIR JULIUS VOGEL ON NEW ZEALAND FINANCE.

AN IMPORTANT COMMUNICATION. Some months ago a rumour appsare 1 in the Christchurch Press to the effect that Sir Julius Yogel was about to form a company to purchase the New Zealand railroads. Mr. Curtis wrote asking if it was true, arid, by last mail, receive \ a reply which he has forwarded to the Mail for publication, at the same time expressing his entire dissent from the censure passed on the Government for the steps they took re the finance of the colony. The following is a summary of Sir Julius Vogel's letter : He first speculates on the foundation for the rumour in the Press, and says there were only two ways from which it could have derived its information. First, he wrote some time ago to a member of the Government that he intended to suggest a plan by which the stoppage of railway construction might be averted, and said he would write his ideas to Mr. Richardson, of whose administrative abilities he speaks in the highest terms. On learning that the Government were dead against colonising works, he did not write, because, as Agent-General, he thought it would be opposing his employers, and therefore disloyal. Subsequently he telegraphed to the Government that he could arrange for converting Colonial stocks on profitable terms, and for providing funds to take up unnegotiated Treasury Bills. Either oE these may have held out ari'i ultimately assumed the distorted form in which the Press disseminated them. THE FINANCIAL PANIC IN NEW ZEALAND. He then proceeds to give the motive of his ideas. In common with all other countries and Colonies, New Zealand is suffering from depression, and the Government, instead of recognising its temporary character, was seized with a panic, and the course a lopte.l was hasty. They magnified the difficulties so as to nearly produce a distrust which might have wrecke i every financial institution and every man of meatsa ts in the Colony. The falling off in revenue should have been replaced by reinstating the tea and sugar duties, but a Property Tax at such a time was dolefully inexpedient, because the depreciate 1 value of property was the main cause of depression, and it was obviously unwise to still further reduce it. The great mistake was made in spending the five million loan too quickly, and arrangements should have been made for extending the execution of existing contracts over an increased period. By its stupid fears, the Government fatally discouraged thousands of farmers, with means and experience and knowledge, who would have made the most valuable settlers, from emigrating to New Zealand— half-a-dozen ship-loads of such men were prepared to go, and would have set the Colony on its legs ; but how could they make up their minds to go to a country whose rulers befoule \ it with such gloomy prognostications 1 All experience shows that New Zealand was justified in its railway policy. (Sir Julius then quotes what had been done in America, and how railway stock had gone up in two yeara.) No sensible persons can study the history of railways in various countries, and say New Zealand has the smallest reason to fear the railway policy or halt in carrying it to a rational conclusion. Mistakes there have been, one being in not capitalising interest during the construction, but it would be as reasonable to cut off a finger because of a little ache as to bring to an end the railway system of New Zealand because of a little difficulty in the way of financing. In deep sorrow he notices that the Colony is being virtually deprived of railways, which is going back to 1868, when the Government devoted themselves to attending to native disturbances instead of to colonising operations. He at once disclaims all sympathy with the idea of a Government parting with railways, or making force 1 sales of land, or permitting continued stagnation of railways unfinished and land unsettled. RAILWAY MANAGEMENT. Sir Julius then gives his idea of securing proper railway administration. The management of them should be absolutely and entirely free from political influence, and be vested in Commissioners — one nominated by the Government, and two elected by the members of each island to perform the duties of a Board for each island, but for the purposes of borrowing money to be associated in one corporate body. These should have the judgment to know how much of present profit it would be wise to saciifice to the object of developing the railways. COMPACT TO C >NSTRUCT A TRU.NK NORTH ISLAND LINE. The Commissioners should recommend to Parliament additional railways with this exception— that the railway policy was based on a bargain which should be held sacred ; that there should be two trunk lines bringing into inter-communication Wellington, Napier, Wanganui, New Plymouth, and Auckland on the North ; and Nelson, Hokitika, Blenheim, Picton, Christchurch, Timaru, Oamaru, Dunedin, Miltou, and lnvercargill in the South Island To ignore this compact is to make a united community impossible. Granted these lines, the rest should be left to the Commissioners, J who would be poor creatures if they were not able to give proper heed to the question of future development. The management in each island should be quite distinct, for it will be an ambitious enough design to make identity of a system in each island without insisting on the same identity for both. The i Commissioners might be made use of for future borrowing, nnd the absurdity of placing railway servants on the estimates as Civil servants be dispensed with. BORROWING. As regards borrowing, a limit should be set to the indebtedness to be charged to the consolidated revenue for railway purposes. The revenue ought to bi recouped to the amount paid for interest during the construction of railways, and in the next colonial loans such amount might be provided to relieve the floating indebtedness added to that of railways. The ten millions already spent on railways have brought into existence an estate of sufficient value to remain for the future the primary security for the further borrowing to complete the railway system. With the exception of putting apart certain land as a railway estate, the borrowing of the Commissioners should be authorised by Act of Colonial Parliament, as borrowing of companies in England, only the Acts should be public, not private ones. These railway loans should constitute a new era, and there should be a first security in the nett railway receipts. It might be urged that the railways have already been assigned as security for existing debts,

and so this would be a departure from an existing obligation, but I do not think so, as the fresh liabilities incurred are merely for the purpose of perfecting and, extending. the system with the view of enlarging the ultimate results, which results go in the consolidated revenue to surmount the technical difficulty of railways having been included in the consolidated revenue. In Acts relating to loans, provision should be insertc 1 that the security given over railway receipts should not prejudice the claim of the consolidated revenue to any pirt of the receipts required to satisfy the liabilities. O i the other hand, to complete the secmity, the railway loans must b« g lanuitca 1 by the Colony. Oncgre.it h I vantage of this would be that altho lgh the loa is would b'J Government loa-is, so far as the security is concerned, they wonl I nof. ba in Unit, sense which so often injures *Now iZ-j.ilaud lo'ius. They would not b'j a direct p irt of tho public debt, .to be quoted a3 s-ic!i. Two great advantages would accrue — first, the opportunity would be gained of converting the present public debt, and saving immensely on the yearly costs ; and secondly, the railway loans would be made to suit the circumstances they have to serve — supposing arrangements were made for clearing off the present- floating debt, New Zealand should not require to come into the market for years to come. Its railway extension otherwise provided for, its liabilities merged in its public debt, it shoulr, start fair and within its income, except perhaps occasional borrowing for some great public works other than railways. By a judicious conversion the present burden of public debt can be greatly lightened, and especially if railway loans in future be severed from the public debt. Twenty years hence, New Zealand railways would be worth more than the whole public and railway debts, as anyone must see who is not a child in intelligence of railway history. FATAL CONSEQUENCES OF SELLING RAILWAYS. The Government which divested the Colony of the contingent profits derivable from keeping the railways for the benefit of the State would deserve to be hanged. Scarcely less should be the punishment of a Government which sacrificed tho public lauds which, through railways, make every year more valuable; and again only scarcely less should be the punishment of a Government that ha 1 not resource sufficient to continue with intelligence the prosecution of the railway system from its present incomplete to a complete condition. The Commissioners could obtain the funds necessary for the railway extension the day after the Act conferring the powers was passed. It might be that railway loans came within the category of loans the Government undertake not to float ; but even so, an advance could be obtained on the debentures, with a guarantee not to float them for the prescribed time. STEAM SERVICE TO ENGLAND. Referring to steam service he says : " Mr. Macandrcw is a hundred times right in his anticipation of the benefit the land would roap from a direct service of large first-class steamers. Ido not believe the advantages to the colony can be exaggerated. Such a line would afford to New Zealand benefits from which it is now entirely shut out. To have no direct line of steam is almost to proclaim the colony uncivilised and to shut it out from the most desirable immigration. Whatever the subsidy required it is extravagance of the colony to refuse it.. As for the port, in the name of New Zealand I urge, do not let local squabbles stand in the way of an essential boon to the whole colony."