The Public Works' Policy.

The Government had but one resource, a policy of the utmost conciliation, until they could place themselves in a position of strength for the future. It was a most anxious period. The 'Maoris were a fiery race, and any little dispute in any part of the Island might have occasioned a fierce and general war.

It has often been said and written that the Public Works' Policy was the outcome of a speculative desire to obtain the expenditure of a large quantity of borrowed money for the gain that expenditure would bestow, leaving to chance subsequent consequences. I will tell you the real facts, and I think I may say there are only two or three men now living who can speak with equal authority. The Public Works' Policy seemed to the Government the sole alternative to a war of extermination with the natives. It comprised the construction of railways and roads, and the introduction of a large number of European immigrants. The Government argued that if they could greatly increase the population of the North Island and open up the means of communication through the Island, and at the same time give employment to the Maoris, and make their lands really valuable, they would render impossible any future war on a large scale. They recognised that in point of humanitarianism there was no comparison between the peaceful and warlike alternatives. They considered also that, financially, it was infinitely preferable to spend large sums on permanent development, to expending equal, or probably larger amounts on issues of warfare. Up to the date of the withdrawal of the troops, the Colony had expended £3,700,000 upon matters relating to native difficulties, without reckoning interest on the large sums which had been obtained by loans. The Imperial expenditure from the Treaty of Waitangi to 1870 was upwards of £6,700,000, so that over ten millions sterling had been expended. You will see, therefore, that there were strong grounds for page 10 believing that from the financial, apart from the humanitarian point of view the policy of settlement was most desirable. The intimation at nearly the end of the year 1869 of the positive recall of the troops created a great panic. There was no cable communication at the time, but General Chute took the responsibility of detaining the force until communication could be made with England. Parliament passed resolutions asking for the permanent location of a regiment of soldiers in New Zealand at the cost of the Colony. The late Dr. Featherstone and Sir F. Dillon Bell were appointed Commissioners to negotiate with the Home Government. They were apprised of the determination of the Colonial Cabinet to try the effects of a policy of public works and immigration as the course most desirable to permanently effect the pacification of the North Island, and they were directed to ascertain what assistance the Imperial Government would furnish. Some of my hearers, who do not remember what took place, will suppose that Downing Street at once replied that the British Government would defray the cost of the immigration and of the leading railways in the North Island. But Downing Street did nothing of the kind. You may be sure there was no lack of ability to urge the case of the Colony by the eminent and able Commissioners I have named. Yet all they could procure, and that after a great deal of haggling, was a guarantee by the Imperial Government of a million sterling of 4 per cent. debentures. It is significant that since that date the Colony has obtained a premium on its own unguaranteed securities bearing 4 per cent. interest, and has even borrowed at a slight discount at 3½ per cent. In the halcyon days of the future when statesmen will only be guided by equity and justice we may expect that Chancellors of the Exchequer will, out of any savings they can effect, forward anonymous gifts of conscience money to New Zealand.

The Colonial Government dared not introduce the Public Works' Policy as a measure to subjugate the natives to future peacefulness. To have done so would have involved the risk of exciting them to immediate hostility. The most that could be stated in that direction was contained in the following paragraph in the speech in which a declaration of the policy was made.

"I cannot close this branch of the subject without adverting to the effect which the promotion of railways and immigration must certainly have on the native question. The employment of numbers of well-paid natives on Public Works, to which in their present temper they will resort with avidity, the opening up of the country and its occupation by settlers, which will result from the construction of roads coupled with the balancing of the numbers of the two races by a large European immigration, will do more to put an end to hostilities, and to confirm peaceful relations than an army of ten thousand men."

There was thus the necessity of bringing the measure forward on its merits, only as a colonising scheme. Pray do not think the Government had any doubt on the subject, but it was a bold departure for so small a community, and under ordinary circumstances it would probably have been page 11 proposed on a less ambitious and rapid scale. But the circumstances forbade anything of the kind. From what I have previously said it may be gathered that the South Island would not be willing to give its credit to benefit colonisation in the North Island without inducements applied to itself of a large character. Hence to really serve the North Island, it was necessary to frame the whole scheme on a scale sufficient to offer great advantage to the South Island. Even, as it was, the plan proposed was shorn of two most important features. One, the pledge to carry through the trunk line of railway from Wellington to Auckland, the other the reservation of an estate of some millions of acres of waste lands of the Crown, which, enhancing in value on account of the railways, would have amply covered their cost. Neither of these propositions was accepted. Apart from the success of the policy, with regard to ending expenditure on native difficulties, the results have been highly satisfactory. Not only was the population most usefully increased, but the railways have enabled the lands of the Colony to be made profitably productive to an extent which would otherwise have been impossible.

During the last financial year the net profits on the 1,886 miles of working railways were £449.000, yielding a return of £3. 1s. per cent, on the cost of £14,733,120. Assuming the average rate at which the money was borrowed to be 4 per cent. the return shows an amount of £140,000 less than the cost of interest. There cannot be any question that this deficiency, were it much larger in amount, is well repaid to the Colony by the collateral advantages derived. The railways were not constructed as a commercial speculation for the benefit of shareholders, but as aids to the progress of settlement It is a moderate estimate that they have raised the average intrinsic value of land within 15 miles of the lines on either side 10s. an acre, and if this be the case the increased value would amount to 18 millions sterling, considerably more than the whole cost of the railways. It is true this has not passed to the whole community but to a number of individuals. Had the reserved railway estate first proposed been sanctioned, a great deal more of the unearned increment would have been gained by the Colonial Treasury. But even so the wealth of the Colony consists of its own possessions added to the property of its people, and the latter if they benefited by Colonial expenditure are amenable to taxation. This calculation does not take into account the increased value of lands and buildings in towns consequent on the business which the railways have brought to them.

There is another and instructive aspect. The value of the exports, the produce of New Zealand in 1870, was four-and-a-half millions sterling. The value for 1892 was over nine millions. A great deal of the increase was due no doubt to natural progress, but a considerable amount is unquestionably owing to the facilities the railways afforded. It is a moderate estimate to consider that the exports would have been 15 per cent. or nearly a million and a-half less if there had been no railways to aid the locomotion.