The Financial Statement.

Observer, Volume XV, Issue 814, 4 August 1894, Page 2

The Financial Statement.

It is suggested by one critic of the Budget that the Colonial Treasurer ought to be cartooned on his knees praying to our financial gods, the English money-lenders, 'Send us a deluge, we pray thee, even though it may be followed by a seven years' drought.' But such a picture would not be fair. It may be that Mr Ward is financing for an inflow of money, but the consequences of such a policy would not by any means be' a scarcity of coin after a year of prosperity. The benefits would be permanent. Money is scarce in New Zealand at the present time, and if the effect of Mr Ward's proposals is to make it plentiful, trade will become active again and industries will be stimulated into energetic life.

Mr Ward's opponents contrast his Budget proposals with the deplorable borrowing schemes instituted by Sir Julius Yogel. There is no analogy between them. Sir Julius Vogel's policy was to borrow ten millions and squander it upon railways that chiefly ran alongside our seaboard, and that were necessary only in a political sense. The money was shamelessly wasted. Mr Ward, on the other hand, has guaranteed two millions worth of debentures for the Bank of New Zealand to save that institution from ruin, and the trade and commerce of the country from being paralysed ; he has proposed a loan of a million and-a-half at three-and-a-half per cent in

order that the money may be lent at five per cent to farmers who are paying ten. For both loans, there is full security and State supervision. The money will not cost the country a farthing in either case, and yet we shall all participate in the benefits arising from its circulation.

Then, and this is where the shoe pinches with some people, Mr Ward proposes to issue consols bearing interest . at four per cent, so that those who wish to make their savings secure will be able to invest them in something more reliable than wild-cat insurance shares or shaky-bank deposits. These consols would be as easily interchangeable as a bank-note, and under this system there would be no danger of a Loan and Mercantile or Bank of New Zealand collapse bringing widows and orphans to destitution and starvation, as has been the case recently. There are hundreds of people in and around Auckland, to-day, whose subsistence depended upon the proceeds from shares in these two precious concerns, and who are now quite destitute. In one district, there is a titled lady who was in receipt of a fair income from these sources, under her late husband's will, and who has lost all she had through the reconstruction of these two companies. Her daughters are now compelled to earn their own living.

Such things would not happen under the new system, because a man who wished to settle property on his wife or children would almost certainly put it in consols, and those for whom it was intended would be secured by a State guarantee and would always be certain of their four per cent income. No prudent man could fairly oppose the adoption of this system, except on the ground on which the present objection is based, i.e., that the- Government may squander the money obtained from such a source. This does not necessarily follow, but there is no doubt, whatever, that the Trust Office, Government Life Insurance, and other funds of a similar character should be protected from needy Governments to a greater extent than they are now.

The loans to farmers scheme is an admirable one, if it is honestly administered by a non-political board. What chance of success is there for a farmer who is struggling against poor crops and low markets and yet is compelled to pay ten or twelve per cent, to the mortgagee of his holding? No chance at all. Now, the Government can borrow at three- and-a-half per cent., and thus are enabled to lend to the farmer at five, and at the same time hold one-Knd-a-half per cent, for administrative expenses. The burden of five or seven per cent, taken off the shoulders of the farmer would be a profit in itself, and the scheme altogether is one that ought to stimulate the farming industry and put new heart into the struggling settler.

There is, of course, the danger that the administration of • the scheme may be characterised by partiality; that more money may be lent in one part of the colony than in another ; and that in granting these loans people of the right political colour may be exceptionally favoured. Such faults in administration would destroy public confidence in the system, but they are after all mere matters of detail, and no Government would risk the good opinion of the country by tolerating such evils as these. The fault of our legislation is that too little is, as a rule, done for the country and too much for the town, but Mr Ward has made a decided exception in favour of the farmers this time.

The tax on Island and Australian fruit is also intended to benefit the country settlers, but the advantages it will confer on them will be as nothing compared with the injury that must happen to the Island trade and the hardships that will necessarily be entailed upon people in the towns. All the sophistry in the world will not conceal the fact that if we shut out foreign supplies we. shall have practically no fruit but apples between May and December and not even apples from July to December. All the oranges grown in the Colony would not supply the demand for even four weeks.

Presumably, we are to do without oranges for eleven months of the year, and even in the favoured month the prices are to be so high that only well-to-do people may eat oranges. Any policy is bad that increases the price of food to the poorer classes, and fruit is not only an excellent food, but also an essential to good health."

The proposal that foreign insurance companies should make large deposits of money by way of security is an excellent one in some respects, but open to objection in others. Prudence demands that we should have some guarantee from these companies that they are able to meet unexpected liabilities before they are allowed to trade, but at the same time some of the foreign insurance companies will be crushed out of existence by this condition, and the consequence will be au increase in fire rates. However, shareholders will benefit by increased dividends. The objection is also made to this proposal that it is a method of raising money, and that the Government will spend these deposits. However, if Seddon, Ward and Co. are to be trusted with the administration of the affairs of the country, surely we are straining at the proverbial gnat if we are afraid to leave these deposits in their hands.

There are other points in the Statement to which I wished to refer, but space does not permit me to dwell upon it longer. But it is a good Budget, satisfactory in the fact that there is a net surplus of £'290,238, and hopeful because the revenue is buoyant and the expenditure for the year will be well within our means. One unfortunate feature is that the public debt increased during the year by three-quarters of a million, but even that is a small addition to our debt compared with what is usually accomplished in this direction. Indeed, the wonder is that the country keeps its head above water as well as it does. Remember that we pay fully four millions per annum to the foreign bondholders by way of interest — two millions on our public debt and two millions on our private. This is furnished by a population of 600,000 people, of whom 400,000 are women and children and infirm men. Of the 200,000 left, 50,000 either hold positions or are non-producers, so that 150,000 able-bodied men in the colony actually provide four million pounds per annum for the interest due to foreign bondholders; that is, £27 per head. And yet New Zealanders live in comfort. Surely, ours is a wonderful country.