NEW ZEALAND FINANCES.

Timaru Herald, Volume XLIII, Issue 3542, 4 February 1886, Page 3

NEW ZEALAND FINANCES.

(Tho^i'sirn?im«;i, Jan. 10th.) We have no wish to play the part of Cissmdra m relation to the future of Men' Zealand, but we cannot avoid regarding that future with Iho most serious apprehensions m the event of Sir Julina Yogel'a financial projects receiving; tho approbation of Iho Legislature. Theao comprehend tho raising of a loan of from eight to ten millions for the simultaneous construction of three trunk lines of railway, the payment of interest out of principal while the works are m progress, anil the imposition of increased Customß duties, which are to havo tho contradictory effect of raising a largo revenue and of fostering local industries. In other words they aro expected to diminish or exclude imports, on tho one hand, fur tho benefit of colonial manufacturers mid producers, and to ponnit of their introduction m such considerable quantities, on tho other, as will put ouougli money m tho Treasury to enable future Ministers of Finance to meet tho alarmingly augmented claims of tho public creditor. It i.i nc-irtvly necessary to point out that the position "f the New Zealand taxpayer, m tho stato of things thus contemplated, would resemble that of Issachar, who was compared to " a strong ;iS3 couching down between two burdeua ;" the one consisting of tho imposts levied upon him nt the Custom-house, aud tho othor of those extorted from him Uy the protected manufacturer, wlr> would, of course, raise his prices to within a small fraction of those charged by the importer. How disastrously theso burdens would bo likely to operate upon tho farmer, tho woolgrower and the cattle-breeder, who already complain of the unrermniumtivo returns they receive from the wheat, wool and frozen meat they export, will bo painfully obvious to anyone who takes the trouble to olculato tho heavy addition which will havo to bo made to the cost of production m consequence <>f dearer machinery, dearer implements and dearer labor. ; for a higher price must bo paid to tho latter m order to enable tho working men to meet the onhanced cost of living which necessarily results from protection. But the most alarming featuro of Sir Julius Vogel's policy is his proposal to increase tho national indebtedness of New Ze:il;iud by sonic-thing like 33 per cent. That colony already owes upwards of £30,000,000, which is equivalent to moro than £53 per head of every man, woman, and child of the population. This is doublo tho incidence of tho debt of tho wholo of tho colonies on this continout. Thero ia no country m the world, however misgoverned, or however extravagant or disorderly m its finances, that can show anything like such uti amount of indebtedness pro capite. It is four times that of Egypt, nearly fivo times that of Turkey, and almost doublo that of Spain ; while tho area of tho islands is &>> very much moro restricted than that of either of the countries wo havo named. Speaking of the present debt of New Zealand, and of the difficulty that is exporieuccd m meeting tho interest on it, our correspondent at Wellington states that, ill spite of fresh taxation, a deficit will have to bo provided for ; that tho Customs duties are losing their buoyancy, aud that any augmentation of them would be attended by a diminution of tho revenuo from that source ; that direct taxation has reached a point boyond which no prudent financier would venture to push it ; that property is declining m value ; that several large owners are selling out m view of coming events ; and that tho audacious project of Sir Julius Yogel is considered to mean "one moro big flutter, and then— almighty smash." No , other opinion can bo formed of if, as it appears to us, by impartial and disinterested critics. It is tho last coup of a , financier of tho school of John Law, and. his motto appears to be that of the young lima who then occupied tho throne of Franco, " After m« — the deluge." But the catastrophe which might not unreasonably bo expected to follow this inflation of the national debt of New Zealand — bringing it up m round numbors to 40 millions sterling— being eight rnilli"ns m excess of that of Canada, which contains eight times the number of • inhabitants — would not bo limited m its ! effects to the geographically isolated i colony. Should such a catastrophe occur • a wound would ho inflicted upon the credit ' <j[ every member of the group. Confidence ' m oiir integrity and m our ability to meet every liability would, be replaced by mistrust, if not by blind panic. There ' would be a sudden and possibly a serious j fall m the value of our securities , and ! wo might find it extremely difficult to . regain the high position we previously , occupied m tho estimation of European t capitalists. Honce Sir Julius Vogel's ! financial project possesses a more than ■ local interest, and is invested with an i Australasian importance. Ho resembles a junior partner m a great banking firm, ; who, having takon to plunging heavily m the Stock Exchange, compromises thereby the good name of tho solid and perfectly solvent house to which he belongs. Our Wellington correspondent writes ; — " It is clear, that if this big now loan is to be raised, the interest on it cannot bo provided out of revenue. Hence there is no other conclusion to be arrived at than that the time is at hand when, as suggested by Sir Julius Vogol last year, the proposal will be made to pay interest \ as well as sinking fund out of loan." This, of itself, is quite sufficient to excite ' a feeling of intonao alarm m the London ' market. Capitalists are acpustomed to i such practices on the part of Turkish, , Egyptian and South American Govern- . uientß, and these have to pay through I the nose for what they borrow accordingly. ■ But for any British community to resort

! to so discreditable a proceeding would be to sink to the level of the foreign bor. rowers wo have named. We earnestly hopo that Sir Julius Vogel'a sohome will be discountenanced by the Legislature and people of New Zealand ; and that the former will insist upon the re-establish-ment of a financial equilibrium, and, if possible, of a sinking fund. Taxation seems to have reached its extreme limits, so that the main reliance of present and future Treasurers must be on economy and retrenchment. By these means they will maintain the credit of the colony, and this will enable them to contract fresh loans from time to time, for paying ofi old debts, at the lowest market rates of interest.