Interest-Mongering and the Accumulation of "Wealth.

Observer, Volume XI, Issue 752, 27 May 1893, Page 3

Interest-Mongering and the Accumulation of "Wealth.

Whius the bank suspension boom is paralysing Australia, it is instructive to turn our attention to some of the operations of the professional interest-mongers of Great Britain, more politely termed British bondholders. Sir John Lubboek is a conspicuous figure in this fraternity, and for a couple of years has been paying particular attention to New Zealand, chiefly in connection with New Plymouth Harbour finances. At a meeting of the Corporation of Foreign Bondholders, held in London in February, 1891, this gentleman stated that the body over which he presided during eighteen years had effected some 32 debt settlements, dealing with defaults of from one to over 50 years' standing, and embracing an indebtedness of no less than £749,500,000 of principal, and of £106,500,000 of arrears of interest and drawings, making the gigantic total of £856,000,000.

This will show the enormous amount of money at command of this organised body of professional money lenders. This comprises but a portion of their stock in trade. Some approach to the annual profits made by these foreign loan-mongers is shown by the amount assessed to income tax in

the United Kingdom under the heading of 'Profits from Foreign and Colonial Investments.' In 1881, the amount was £29,000,000, but had increased, till, in 1891, the total was £55,000,000. It is not easy to get the accurate returns of income. At a meeting in 1885, in London, one of the speakers quoted Mr Giffin (a statistian of world-wide repute) as saying ' I shall be confirmed by those who know the city in the opinion that much income comes home from abroad, which is not returned to the Income Tax authorities ; those estimates fully warrant me in setting down forty millions as the foreign income omitted from the Income Tax returns.'

This, in plain language, indicates that British bondholders by fraudulent returns evaded taxation on about one-half of their actual income. A parallel case was exposed in New Zealand in 1888 by the then Property Tax Commissioner (Mr Crombie). Eeferring to one of the tables in that year's report he said, ' It would appear that the cash returned, including cash deposited with banks, etc., is £6,718,000 less than the total deposited in banks added to note circulation.' He further explained that the department were powerless to punish the defrauders, there being no authority by law to obtain information from the banks. Nor, it may be added, will there ever be as long as the money and property-holders remain chief lawmakers.

In 1888, when the question of Colonial loans was being very much discussed in London, the following statement was compiled:—ln 1851, the debts of Australia were only £58,000. In thirty years, the amount had swelled to ninety-six millions. In 1885, it stood at one hundred and forty millions, for Australasian debts alone. At that same time (1885) the various colonial debts of the British colonies aggregated two hundred and twenty- six millions. These figures are given chiefly with a view of showing the rapid accumulation of wealth by interest-mongers aB represented by British bondholders, whose chief business in life it is to squeeze producers through the various ' sprat to catch mackerel' devices common to loanmongering finance. They become so rapidly and disgustingly rich, as per example nearly one hundred millions per year, shown by the statements previously quoted, that the difficulty is becoming serious as to where necks are to be found whereon to saddle their vast yearly accumulations.

In the course of time, there will be no new countries to exploit, or — as Joanmongers prefer to say—' with resources requiring development. 1 Borrowers will then necessarily become scarcer. What then will beoome of the enormous annual increase in wealth? It has been shown what this is aB to merely foreign and colonial investments. This, however, as regards the United Kingdom is a very small item against the total national income from capital. Mulhall, in 1889, set this down as £1,285,000,000. These figures are staggering, referring as they do merely to one great country ; but when the capital value of the property from which this annual income is derived is set out in figures the total becomes apalling.

The sum of the total private wealth of the seven colonies of Australasia was figured out by Coghlan (New South Wales) in a paper read at Hobart in January last year as £1,169,434,000, or, as figured out per inhabitant, the nice little sum of £309 each. Considering the fearful amount of suffering and actual starvation undergone by the propertyless in the sister colonies these last two winters, intensified now by the bank suspension boom, it need not occasion so great a surprise that Borne of the luckless starving people should blurt out, as depicted in cartoons — • Come, then, Mr Statistician, just hand me over my share of that swag !'

In a small way, the ' sprat to catch mackerel ' device has just been shown in the ordinary statement prepared for shareholders in the National Bank of Australaßia, as per Melbourne Argus. The bank started in 1858. Its present paidup cap Hal is one million. It has paid in dividends, with balances on hand at 31st March last close upon three million sterling, over and above all working expenses. Not a bad return for the shareholders. It had also been entrusted with £8,892,050 in the way of deposits. Thus it may be said the one million in capital has been sufficient bait to draw unto itself nearly nine millions of non-shareholders savings.

Of six bankß enumerated in the New Zealand Trade Review of October last, the total authorised capital was £14,850,000, of which amount only £5,900,000 had been paid up. Here the total under the heading of reserves and undivided p«ofits totalled £2,945,075. This takes no account whatever of dividends paid tc shareholders. Here again is evidence of ' sprats catching mackerels.' New Zealand now knows the meaning of ' Assets Company.' The Australian colonies are just ripe for the setting up of assets companies. These may be termed the tit-bits of — yes, we will Bay British financiers The nibbling haa begun. Properly speaking, they are money vultures.

There were numerous instances of the incommodiousness of wealth as represented in gold during the panic in Melbourne when depositors were racing to withdraw. It was only when gold was weighed out by the quarter and half owt. and passed over to the withdrawer that the inoonvenienoe of gold was realised. ' What can I do with it ?' became a common query. The abstention from borrowing by the colonies for either public (that is Government) or private purposes, would very soon place the ever- clamorous British bond-bolder face to face with a similar query. So far, they have had no check. There have been fairly plentiful outlets for their ever increasing accumulations. And money panicß have always enabled them to tighten the screw and expand their meshes.

New Zealand has shown under its truly Liberal Government that progress in its truest sense— the general well-doing of its people— is possible without continual borrowing. A colony so richly endowed in soil, climate, mineral and other resources can create its own wealth. This was the conviction of its ranch lamented late Premier. The pity is that so able a chief as John Bailance was cat down so early in his career of useful work and practical legislation. He did what others had only dared to talk about. Plenty remains to be done. The money bogey should be laid low. It is high time people generally realised the iniquity of the present modes of interest-mongers. Money, instead of remaining the universal enslaver with almoßt illimitable powers of extortion, should be made to pay for itß own safe keeping.

There should be more in the way of co-operation, and no more borrowing from British bondholders. The best kind of co-operation was admirably set forth at the last year's Congress at Rochdale, when the chairman said : ' What he would like to see would be the co-operators putting their profits together and saying that instead of a few people owning all this money it should belong to the whole people. . . . The profits of all trade, industry, commerce, importation, banking and money dealing, should fall back again into the hands of the whole people. 1 Set this latter against the interest-mongering plan, and there can be no question as to which is best for the people.