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The Pamphlet Collection of Sir Robert Stout: Volume 65

A New Policy

A New Policy.

Sir,—At the present juncture, a serious attempt to grapple with the subject of Colonial taxation appears, to me, to be more worthy of careful enquiry and calm consideration than any "bogie" with which politicians are now frightening us. It is almost impossible to read the speech of any public man without finding sad and almost bitter allusion to the "millions" of money sent away from this Colony annually, to satisfy a cruel and grasping creditor in England. From the speeches of some aspiring statesmen, it would almost seem to be "within the range of practical politics" that a "New Zealand Colonial Debt Repudiation Bill" is to form part of next session's amusements. As the money owing was obtained at the desire of the borrower, and not forced upon the country by the lender, the persons who object to our being in debt should show us some legitimate way out of the difficulty; they might, for instance, auction their share of the "unearned increment," and apply the large (!!) amount of cash that would be obtained towards paying off the loan of 27 or 30 millions of pounds owing by the State.

To take a serious view of the matter, it does not appear probable that we can obtain more favourable terms than those at present prevailing. As our four per cent debentures are at par, we must, it seems, be content to pay that reasonable interest on what we borrow in England for general public purposes. I venture to say, Sir, that it is rather the interest on private borrowing than that effected by the State that presses heavily upon us as a nation. In many ways, the public expenditure helps to pay its own interest. The large amount of money that is "placed" in this country on mortgage, at a high rate of interest, is a much heavier burden than the National Debt of New Zealand.

Speaking generally, there may be said to be a loss of 3 per cent sustained annually by those persons who have to raise money by mortgage. The security they offer may be termed the most popular of all with capitalists; but the small amounts, as a rule, and individual responsibility cause the rates of interest to be high in comparison with that paid by States. If, without in any way interfering with the rights of present mortgagees, the State could arrange to guarantee 4 or 4½ per cent for all money raised at regular periods to pay off existing mortgages as they become due, a saving to the country of the best part of one million sterling would be made yearly. Farmers, who at present pay from 7 to 9 per cent, would be very glad to pay the Government (say) 1 per cent for the national guarantee, and—on the combined security of the Government and the land at present mortgaged—the English capitalist would willingly lend all the money needed at a moderate interest, free from all Colonial taxation.

The existing amounts for which the different farms are mortgaged, might form a basis for operations, or the State might raise a certain proportion of the Property tax value. Such a course would not, necessarily, injure Colonial capitalists; on the contrary, there would in all probability, be increased demands for loans on crops, second mortgages, &c. The subject is so large and so new that it is only necessary to call public attention to it, that it may be viewed from all sides, and its advantages and inconveniences duly weighed.

In conclusion, Sir, I may state my conviction, that by paying (in combination) less money annually, for 50 years, than they pay now as interest, farmers could redeem their land, so that their children, or grandchildren, would come into unencumbered estates; or the land might be nationalised in this way.

—I am, &c.,

J. H. N.

Lyttelton Times,