The New Zealand Railways Magazine, Volume 10, Issue 1 (April 1, 1935)
The Birth of Our Railways — The Great Public Works Policy of 1870. — Part I
Julius Vogel, Treasurer of New Zealand, placed his great Public Works scheme before the New Zealand Parliament on 28th June, 1870. Although the scheme was not original in plan, a similar one having been suggested eight years earlier when the Maori Wars had rendered it impossible to spend money on immigration and Public Works (1), the magnitude of Vogel's plans made the country gasp. His Government, behind which Vogel was the moving power, had to grapple with a difficult task. The Maori Wars had raised the burden of national debt to £8,828,000. The population was less than 250,000, and yet was scattered over nine provinces, each with its own Government. There were only forty-six miles of railways (2).
The elements in Vogel's answer to this problem were briefly these: (3) The colony was to incur a liability, spread over a number of years, amounting territorially and pecuniarily to about ten million pounds, which was to be expended in set proportions on immigration, main railways through each island, roads through the interior of the North Island, the purchase of native land in that island, the supplying of water on the goldfields, and the extension of telegraph works. These works were too vast to be undertaken by small local governments, and were to be carried out under a centralised national control. The necessity for thus taking the administration of Public Works and immigration out of the hands of the provincial authorities was pointed out by Vogel when he wrote: “Immigration and Public Works, from 1853, when the present Constitution was first established, to nearly the end of 1870, exclusively devolved on the several provinces; and it may be said that except to a limited extent in the provinces of Otago and Canterbury, they had from various causes ceased to exist for a number of years previous to the latter date. Even if the provinces had generally been able to administer these two great departments of colonisation, it became evident that an administration conducted by independent local authorities with distinct local interests and functions, would necessarily be disjointed and wanting in system and comprehensiveness.”
Vogel, in presenting his scheme to the House, stated that a desire was manifest throughout the whole country for some such scheme. (4)
“I now ask you to recognise that the time has arrived when we must set ourselves afresh to the task of actively promoting the settlement of the country. We recognise that the great wants of the colony are Public Works in the shape of roads and railways, and immigration… . Now, as to the mode of payment for these railways, it is essential, in order that we shall not proceed too fast and undertake more than our means will justify, that we should fix a very effectual limit to the liabilities incurred. Speaking broadly, I contend that during the next ten years the colony will run no risk if it commits itself to an expenditure of ten millions for railways and other purposes comprised in these proposals … The land should be made to bear a considerable portion of the burden. We propose that authority should be given to contract for the railways by borrowing money, by guaranteeing a minimum rate of profit or interest, by payments in land, by subsidies, or by a union of any two or more of these plans. The contractors may want some money, but they should be glad to receive some land to yield them a profit consequent upon the effects of the railway; and similarly, if the routes be judiciously selected, the contractors should be glad to keep the railways with the security of a minimum guarantee… . In some cases the Government might take as collateral security the results of a special tax, or a mortgage over particular properties, such as railways in course of progress, or over rents and tolls… . I suppose that some 1,500 or 1,600 miles of railway will require to be constructed, and that this can be effected at a cost of £7,500,000 together with two and a half million acres of land, and that, in addition, about a million will be required to carry out the other proposals I am making. I leave on one side the cost of immigration, because that expenditure will be essentially and immediately reproductive. Suppose that this money is expended at the rate of £850,000 a year for ten years… . So confident are we that a great deal of the work comprised in these proposals can be effected by guarantees or subsidies, and by land payments, that we seek authority to borrow only six millions to carry out our proposals, including immigration. For the first three years the payments will be so inconsiderable as to leave little room for apprehension of difficulty in finding the money. After three years, supposing that extraordinary sums are required, will it be a great hardship to increase the stamp duties, or to have a house tax, or an income tax, or some tax which will touch that lucky class, the absentees? … It (the question of immigration) is essentially one of the greatest questions of the day… . From whatever point of view you regard it… immigration is a profit to the state, if the immigrants can settle down and support themselves…
As every immigrant who becomes a settler will be a profit, so every immigrant who leaves the colony, or is unable to procure a livelihood in it will be a loss. We therefore say that we will introduce immigrants only to those parts of the colony which are prepared to receive them. What the nature of the preparation may be it would be impossible now to define. It might be land for settlement, it might be employment of an ordinary nature or on Public Works, it might be that facilities for establishing manufactures or aiding special co-operative settlements are offered.” (5)page 40
The foregoing remarks show very clearly the various points which Vogel had in mind in developing his scheme. In view of them it can hardly be maintained that the scheme was not carefully safeguarded in most respects. The scheme was to work in a cycle. Immigrants were to provide the labour for the works, and so obtain employment as soon as they reached the colony. As waste lands were thus rendered accessible by their labours, they could take up sections and become producers.
It was provided that large tracts of land either already owned by the State, or to be purchased by it, along the routes of the railways, were to be reserved as a public estate. The possession of such land would facilitate settlement, while it would also form a security for the expenditure. It was calculated that on subsequent lease or sale, the great increment of values resulting from railway building through such lands would recoup the colony for a large part, and possibly for the whole of the expenditure. Vogel had also asked, as a further proviso, that there should be a tax on the improved value of lands benefitting from Public Works construction. Thus Vogel stipulated for sound security for the loans which he proposed to raise.
The magnitude of the scheme propounded in 1870 is well represented by an American writer: (6) “The total value of the appropriations of land and money, therefore, amounted to 60,000,000 or 70,000,000 dollars, which for a community of 250,000 was a bold bid for development; equivalent, in fact, to an appropriation of 18,000,000,000 or 20,000,000,000 dollars for public improvements in the United States to-day (1904), or enough to buy up all the railroads and telegraphs in the country, clear out the slums of our great cities, irrigate the thousands of acres of arid lands, and colonise the needy in co-operative settlements to the mutual benefit of themselves and the commonwealth.” This writer goes on to state that including the reservation of lands along the railroads as a public estate for future sale or lease, and the policy of a betterment tax on private lands opened up, the Public Works policy prepared by Vogel was one of the “wisest, justest, most far-sighted plans that has ever been devised for the development of a new country.”
[References: (1) “New Zealand in Evolution,” Scholefield, p. 158; (2) “Public Works in New Zealand,” W. J. Bull; (3) pamphlet, “The Finances of New Zealand,” also Handbook of New Zealand, 1879, p. 79; (4) “Are We to Stay Here?” Sealy; (5) New Zealand Hansard, July 28th, 1870, also Cyclopedia of New Zealand, Vol. I., p. 60; (6) “The Story of New Zealand,” F. Persons.]