page 20

Borrowing.

Interest is a devouring thing,
Like a foul cancer it eats into the body
Wasting and destroying.

Looking Backward," and "Looking Forward; "looking east-ward and looking westward; looking northward and looking southward; looking upward and looking downward; looking and watching, and waiting! Such is the aspect presented by the peoples to-day, wherever man is to be found in highest development. In England, America, France, Germany, and the great colonies of the Mother Land, the close of the nineteenth century shows the people in a state of anticipation of impending change of a radical and impressive character. It may prove beneficent or malevolent, bring peace and love or enmity and disruption, but whatever the shape it may assume clearly it as not prudent to entirely disregard the writing so plainly displayed upon the wall. Surely, if change is indeed imminent, a sound judgment would prompt to a close examination of what elements of danger may lie hidden within the confines of our own national edifice, and if any be found to east them quickly forth so that, whate'er may betide, our house at least may be found set in order against the coming time.

The unequal distribution of wealth—the heaping up of vast riches into the control of a few for expenditure upon selfish gratifications, whilst masses of people remain buried in sodden poverty, ignorance and vice—that, obvionsly, is the source of present irritation and unrest The spectacle of the rich richer, the poor poorer, has excited the attention of men—stirred to dissatisfaction, begotten envy, aronsed cupidity, inflamed to madness—before to-day, and now the difficulty presents itself of how to adequately cope with an obviously great and rapidly increasing evil; an evil which, like a cancer, threatens to eat into the very vitals of the body politic. This is the cause of present manifestations, and to in some way counteract its insidious tendency the thought of the thinking world is to-day directed.

In these new landa, far removed from the populous, glowing, and glorious centres of old world civilisation, it may perchance be thought that the dangers which threaten and the difficulties which encompass the settlement of problems should concern but little. Our crops, no doubt, will grow, our fruits will ripen, our gold will glitter, our mutton fatten, our fleeces yield, and markets will be found for our products somewhere on the world's surface, no matter how empires are page 21 "founded, flourish, or decay." This, howevear, is a view as superficial as it is selfish. We have started to build these new States upon old world models, and if the faults clearly displayed in the model have been repeated in the foundations already laid, it is surely wise to take heed to it, so that, as far as human judgment and forethought may avail, the treacherous errors may be rectified. Then the evils certain to follow upon them may be to some extent at least avoided.

All wealth is derived from the products of the earth, through the carefulness and the labour of man; but the wealth that is flowing so lavishly into England to-day is chiefly the result of capital invested in and lent to other lands. For instance, the Governments of the seven colonies of Australasia—New South Wales, Victoria, New Zealand, Queensland, South Australia, West Australia and Tasmania—owe to the people of England no less a sum than £189,483,928 the interest payable upon which reaches to something like £7,580,000 per annum. In addition to this, there are loans to the great city corporations, to harbour boards and other public bodies, besides capital invested in banking and insurance companies and in other ventures, so that it is not too extravagant to roundly estimate that, apart from all considerations of commerce or trade, an annual income of at least a million a month is steadily derived from the seven colonies of Australasia alone; the total population of which at last census was only 3,811,149.

The rise, development and decadence of the National debt of the Mother Country is full of interest, and not without valuable lessons to all who bestow thought upon public affairs. In 1688, when William III. of glorious memory ascended the throne, the total indebtedness of England was only £664,263; but in the short period of 128 years—that is to say in 1816—owing wholly to the Continental and American wars in which it had been thought to the welfare of the people to engage—it had attained to its maximum—900 millions. As every one knows, the money was borrowed in the most reckless and extravagant manner, and, had even ordinary prudence been exercised, hundreds of millions might have been saved to the State. The important point to be remembered, however, is that the Government raised its loans from within its own territories; that, the power of England being on the seas, the borrowed money expended on the navy went back to the people for circulation; that the borrowed money expended on the army also went back to the people for circulation; that in short the whole of the loans raised by the Mother Country were laid out in the building of ships, the erection of barracks, the supply of war material, salaries and wages, stores, &c., and so never went out of local circulation; that the whole of the interest—which in 1817 represented an annual charge of over 32 millions—went back to the people, and was not lost to them as it would have been had the debt been contracted with financiers in other lands. A very little reflection is necessary to realise what an enormous difference would have resulted to the people of England had the 900 millions of loans raised been expended amongst other people, or page 22 even the millions required to be paid annually for interest been with-drawn from circulation through having to go to public creditors in other countries. In Victoria, in early days, gold "booms" were of comparatively frequent occurence; these were followed by silver "booms," and more recently still by booms in land, but all thia "booming," did not take one shilling out of the country. Money changed hands, some people foolishly squandered their money in the purchase of allotments at perfectly ridiculous prices, which allotments being quite unproductive, were of no practical value afterwards; but the cash paid went into the pockets of other people within the colony who became the richer. Where the country really lost was in the plentiful crop of embezzlements, frauds, failures, and the demoralisation resulting to which such reckless speculation gave rise. In the same way, hundreds of thousands of pounds change hands every year through the medium of the Melbourne Cup, but as the money does not leave Auatralasia—is not withdrawn from local circulation—the colonies are not one whit the poorer through such gambling, however much suck investments, as gambling, may be deserving of condemnation.

Of course, it is recognised that, in the circumstances in which they were placed, it was impossible for any of the colonial Governments to pursue any other policy than to go to the English market for the capital necessary for the construction of public works; and, equally of course, it is not very difficult to feel how very different the position would be if, through the borrowed money having been raised locally, some £1,800,000 had not to be sent annually out of a colony, like New Zealand for instance, to pay the public creditor. It was essential to the progress of the colonies that railways should bo constructed, and it may be assumed that New Zealand has in public works full value for at least a considerable portion of her thirty-eight millions of debt; practically, however, the position is that England has contracted to execute the whole of the railway-carrying work of tbe colony, and the people have to send her some £1,800,000 a year in payment for the performance of such work. If the contractor lived in New Zealand, and spent some considerable portion of what was paid him within her shores, there would then be no actual loss to the State, for the money paid would still be there; butt obviously, to withdraw from circulation such a large sum, year after year, constitutes a very heavy drain on the financial resources of the people. The cash that represents their earnings has to go from amongst them.

During the last session of the New South Wales Parliament, a Freetrade orator, seeking to illustrate his argument, demanded to be informed if any member would seriously propose to pay 5 per cent interest for money raised within the colony when the loan required could be got for 4 per cent. in England. The suggestion was received with laughter and shouts of applause, It is, however, a serious question whether, when all the circumstances are considered, it would not be wiser to pay a little more for interest to the local lenders, and page 23 thereby keep the circulating medium within the country, than to continue to pursue the policy of past years.

It the manner in which the National debt of England increased by leaps and bounds is astonishing, the manner in which it has decreased is no less so. As has been stated, the close of the Napoleonic struggle in 1816 saw the debt at something over 900 millions; in the 75 years that have passed since that period this huge indebtedness has been decreased—notwithstanding additions made when slavery was abolished, and during the Russian war—by no less than £218,919,941, so that in April of last year the total liablities of all descriptions stood at £681,080,059. This is a result which no statesman of forty years ago would have believed to be within the scope of possibility. But a very little consideration will show that every reduction made makes the task of further reduction easier; for, as year by year the resources of the country increase, and as year by year there is less required to be paid in interest, so the funds necessary to repay a portion of the principal can be found with less and less difficulty. The Bank of England's indebtedness has now been broken, and it is estimated that, if the rate of reduction is maintained, the end of twenty years will witness the total liability reduced to a little over 400 millions, and that when one hundred years shall have elapsed from Waterloo, all that will remain of the great debt will he an insignificant fragment. Surely the contemplation of such a performance should give hope to the public men of these debt-overladen colonies, and inspire an earnest desire to follow in such honourable footsteps. If the record of debt extinction of the Mother Land isbrilliant, surely in these young and progressive States, with rapidly increasing populations and immense resources, it can be rendered still more so.

A good deal has appeared in the public prints of New Zealand recently regarding the distress amongst the unemployed in Sydney. Why Sydney should have been subject to such pertinacious reference it is difficult to say, but the fact is, that the distress in Sydney han not in any way approached to that which has obtained in Melbourne and Brisbane. In the early months of the current year, witnessing the condition to which Queensland had been reduced, a millionaire—Tyson by name—waited upon the Treasurer of that colony and patriotically offered to assist the Government of the land in which he had amassed his wealth, in extricating it from financial difficulty. It was promptly pointed out to him that the easiest and most effective way in which to do so, would be to take up some of the debentures which the Government had found some difficulty in issuing, and Mr, Tyson, it is stated, at once invested some £200,000 or £300,000 worth in the manner indicated. Now, the question arises:—Is practical patriotism in the colonies confined to Mr. Tyson? There are not wanting millionares in New South Wales and Victoria, and there are many wealthy men in New Zealand; why should not some inducement be offered to them to take up some of the liabilities of the colonies in which they have become rich beyond their page 24 most sanguine dreams, and thereby endeavour to some extent to [unclear: keep] the payment of interest within the country? The reduction of [unclear: the] national debt of England has been very greatly facilitated by the [unclear: issue] of "terminable annuities;" why should not some such system [unclear: an] "terminable annuities" be tried in the extinction of colonial indebted ness? It will be replied that money so invested would be withdraw from circulation here and spent in England in the redemption of [unclear: the] loan, but, precisely the same thing will be said of any attempt that [unclear: is] made at debt extinction. If money is required for farming or [unclear: sheep] grazing, for purposes of commerce or trade, no sensible person [unclear: would] leave it in the bank for a fixed period, and no scheme likely to [unclear: be] suggested would affect the investment of that capital. But the [unclear: money] lying at interest in the Savings Banks and other institutions—a [unclear: very] considerable sum—is evidently not needed for investment in [unclear: settlement] or industry, and if transferred to the payment of the public creditor [unclear: in] England, the amount annually paid in interest would at least [unclear: remains] for circulation in the colony. Probably, better terms as an [unclear: induesment] to invest would be expected by the purchaser of a colonial [unclear: annuity,] but, as has been seen, there are advantages to the colony which [unclear: countes] balance to some extent compliance with them. In 1816 the [unclear: National] debt of England averaged £45 per head of the population: the public debt of New Zealand now averages £60 per head of the [unclear: population;] but the purchasing power and value of money in England in 1816 [unclear: was] very different from what it is in New Zealand in 1892, and [unclear: if the] Mother Country, at the close of the continental war could [unclear: immediately] enter upon a policy of debt extinction, New Zealand and all other [unclear: of] the colonies should be equally able to do so.

It is exceedingly gratifying that both the political parties in New Zealand are at one upon the subject of a non-borrowing-from-outside of-the-colony policy, and that already a beginning has been made [unclear: in] the work of reducing the public indebtedness. It is true it is but a [unclear: small] amount that has been paid off, but it is extremely valuable as [unclear: a] beginning. When one-fourth of the debt shall have been paid, [unclear: there] will be something like £500,000 a year saved from the payment [unclear: of] interest, and this sum will be available for appropriation for [unclear: the] payment of a portion of the principal. That fact should lend [unclear: a] stimulus to effort. The fact that when the public debt has been [unclear: very] largely reduced, the surplus revenue derived from public works will [unclear: be] sufficient to provide for railway extension throughtout the colony on [unclear: a] very liberal scale ought to afford a further encouragement. If the indebtedness of New Zealand could [unclear: be] reduced one-half, there would be a fund equal to about £300,000 a year derived from profits from [unclear: the] railways available with which to push forward with new works, [unclear: and] this money would remain in the colony instead of being sent away [unclear: as] at present. Surely the prospect of attaining to such a state of [unclear: affairs] is worthy or the most strenuous effort.

There is one more fact that ought to be noted in this connexion. page 25 If New Zealand has come to the end of a borrowing-from-abroad policy, the other colonies have not. Nowhere in Australia has a voice yet been raised in deprecation of the raising of further loans. Of a truth the present circumstances of the larger colonies are so desperate that they must borrow; but were the circumstances otherwise it would make no difference in their policy; they would go on borrowing—as they will go on borrowing—until their applications meet with an emphatic refusal, or the price asked for money becomes too exorbitant even for them to pay. The fact appears to be ignored in Australia that, before there can be a loan contracted there must be those willing to lend. The moral of this is, that the distress prevalent in Australia to-day is but the initiation of still heavier troubles to come. Resort has already been taken to Treasury bills discounted in the English market, and on the immediate track of the issue of her bills Victoria has been forced to appear as a suppliant for more money on debentures. In view of the paralysis—if not catastrophe—that is imminent in Australia, it only needs that New Zealand shall go steadily forward in the financial policy adopted to find she has become an object of the deepest interest to thoughtful minds; then, in the gloomy days that are approaching, those in Australia who have not lost everything will seek to cross the sea that divides, and a still larger population than forsook New Zealand shores during recent years will come streaming in, bringing a tidal wave of prosperity along with them. The position of the last few years in New Zealand is on the turn for reversal—Australia is entering upon a period of such severe trial as few as yet can foresee, whilst New Zealand is happily emerging from trials past, Presently she will become the attraction of attractions, and many thousands will seek refuge from the financial storm upon her fertile shores. It may be anticipated then, that under a patriotic policy and judicious management the average indebtedness of the population will soon rapidly and largely decrease; that trade with strident steps will speedily revive; that money will become more plentiful, revenues increase, and the ability to repay obligations will strengthen so that the task of debt extinction will become correspondingly easy. It is the evident duty of the Government to look these events, so clearly foreshadowed, in the face, and to have every door that opens to employment and to the development of the resources of such a bounteous land thrown wide, so that there shall be no fatal pause to the new colonists of these beautiful islands when they come.