The New Zealand Railways Magazine, Volume 10, Issue 2 (May 1, 1935)
The Birth of Our Railways — The Great Public Works Policy of 1870. — Part II
In Part I. we studied the Public Works scheme of 1870 as put forward by Sir Julius Vogel. Vogel had proposed to borrow from six to ten millions and to use this to weld the isolated provincial settlements in New Zealand into a strong united nation by linking up the various parts in a comprehensive Public Works Policy, by opening up the country to settlers, and by a vigorous immigration policy. Vogel proposed three chief securities for this loan; the Government was to purchase the land along the proposed routes and hold this as a railway estate whose improved value was to be utilised to cancel the debt; the Government was to impose a small betterment tax on private properties which the new railways increased in value, this revenue also to be used to cancel the debt; and main lines were to be completed before branch lines were begun.
This scheme was too daring for the men of that day. In the debate in the House it was referred to as a monstrous bubble which would ruin hundreds of families by inducing a spirit of gambling. The provinces, moreover, were at once jealous of a scheme which lay outside the control of their own petty politics. With characteristic short sightedness their representatives refused to surrender the proposed railway estate to the General Government. Their representatives were, in the main, land-owners who bitterly attacked the betterment tax. Both the land reservation and the betterment tax were thrown out by Parliament, but the interest of the country was aroused by the prospect of more capital. Already Dr. Featherstone and Mr. Francis D. Bell had secured from the Home Government the guarantee of a loan of one million. Now the greater Loan Bill was passed by the House, but in a different form from Vogel's original, and stripped of his proposed securities for the repayment of the loan. Concessions had had to be made to the provincialists and to the gold-fields members. Under these changed conditions, power was granted the Government to borrow large sums to be expended as follows:—£2,000,000 on railways, £1,000,000 on Immigration, £400,000 on North Island roads, £300,000 on purchase of North Island lands, £300,000 on water races for goldfields, £600,000 on telegraphs, £40,000 unappropriated. The colony had not grasped the essential point in Vogel's scheme—completeness.
Paper read before Dunedin Financial Reform Association, Sept. 1888, by W. H. Pearson. “Public Works in N.Z.” by W. J. Bull. Ibid.
The administration and responsibility of the Public Works scheme was vested in the Central Government, subject to some exceptions in which its action depended on the previous concurrence of provincial authorities. These exceptions were subsequently abolished. As soon as the session of 1870 closed, it became necessary to organise a department to undertake the organisation and control of the work. This department was at first in the hands of the Colonial Secretary. As soon as adequate funds were raised and important works and immigration on a large scale had been begun throughout the whole colony, a special Minister was appointed, and shortly afterwards there was one for each Island. In the latter part of 1872 the whole department was divided into two—Public Works and Immigration—each under a Minister.
In 1872 Vogel went to England to negotiate for the loans. A rise in the prices of wool and wheat improved the colony's credit, with the result that the loans were fairly easily negotiated, though at a high rate of interest. Vogel on this visit also made arrangements for letting the contract for constructing the railways.
Parliament quarrelled almost immediately with the terms under which Vogel had given the contract to Messrs. Brogden and Sons, a well-known English firm. The contract had been for the construction of light, narrow gauge lines designed for the early production of revenue at a sacrifice of convenience in travelling and working. Severe gradients were adopted in preference to flatter and more expensive lines, and curves of sharp radius in page 44 place of easier but costlier routes. These rather short-sighted plans, the rectification of which has subsequently cost a vast amount of money, were quite acceptable to the Parliament of the day. The main ground for complaint against the contract was apparently the fact that the first four sections of the Clutha line, constructed by open tender, had cost 5 per cent. below the engineers' estimates, while sections constructed by Brogden and Co. cost 20 per cent. over the estimates. The estimates were, however, unreliable, and no charitable allowance was made for variations in the nature of the country.
Many other errors in policy apppeared. The influx of gold into England from goldfields in Australasia and America brought the gold value down. English ironmasters induced New Zealand authorities to take a large portion of the borrowed money in railway material, and thus to lay in an immense stock which was every month falling in gold value. In New Zealand itself farmers were affected by falling world prices. They had bought land at high prices in the anticipation of a continued boom, and their mortgages now became too heavy. The result was a general contraction of business. These factors, operating through the years following 1870 upon a debt contracted without adequate security, only increased the difficulties of the country.
The continuity of the scheme was also destroyed. Land in Canterbury sold at the uniform price of £2 per acre. Wheat in 1871–72 was at a high price. These two factors gave the province an enormous impetus, with the result that it demanded branch lines to feed the great South Trunk Railway. This was fatal to the unity of Vogel's scheme. The money designed for main lines was diverted to branch lines in the South Island. Parochialism triumphed over common-sense and national welfare and there ensued in Parliament a scramble for local lines.
Probably the greatest blunder was the committing of the surveys and construction into the hands of inferior and inexperienced engineers. The estimate made by Sir Charles Fox for the New Zealand Railways was £3,500 to £4,000 per mile, including telegraph, fencing, rolling stock, and locomotives. His estimate allowed for a wage of six shillings per day, and was based on a very thorough experience of the Queensland railways which cost £6,500 per mile, of the Canadian railways which cost £2,900 per mile, and of the Norwegian railways which through flat country cost £3,270 per mile, and through heavy country cost £4,660 to £5,380 per mile.
The work in New Zealand, however, was not entrusted to British firms or to the engineers who had been associated with these other projects, and this, as we shall see, cost the country a great deal. New Zealand engineers had not the necessary experience. A more careful selection of routes and construction of lines would have saved enormous sums spent on renewals, repairs, etc. “The constant application for fresh appropriations for the completion of works, the repeated mention of damage done by floods to the various lines, and of extra bridge work required, all go to show that there must have been grave errors in the original estimates, and still graver defects in the construction and laying out of the lines.” The result was an additional and unforeseen expenditure.
W. J. Bull quoted the following illustrations of this—
(a) The estimate for the Greymouth-Hokitika line in 1871 was £85,000. In 1876 this estimate had to be revised at £222,000; (b) on the Timaru and Point line in one place a box culvert had subsequently to be replaced by a bridge 315 yards long; (c) On the Moeraki line half a mile had to be abandoned after its construction; (d) the tunnels on the Wellington-Masterton line were found to be too narrow to admit of the passage of engines, while the platforms had to be shifted back to make room for the trains to pass. It was discovered after they had been built that all the tunnels on this line required lining. (e) One portion of the Picton-Blenheim line had to be shifted after its construction, and the flood openings enlarged and increased in number; (f) the Grey Gorge bridge collapsed and had to be reconstructed.
As the result of such expenditure the New Zealand railways cost almost £7,000 per mile, an enormous figure considering that they were on a narrow formation with little fencing in many places. Thus the national debt was increased beyond what had been anticipated, and beyond what the country could make comfortable provision for.
The Parliamentary strife occasioned by the great Public Works Policy had one other important effect during these years. Vogel had throughout his career made it plain that he supported the Provincial Governments so long as the disunited state of the country made their retention necessary. The railways, however, were to be national and not provincial.
The provinces had commenced borrowing in the previous decade, Canterbury having set the pace by borrowing large sums to build the Lyttelton tunnel. The provincial loans were spent recklessly on poorly reproductive objects. Southland, for example, had spent large sums on a wooden tramway to the goldfields and on harbour works at the Bluff. The province soon found that it could not meet the interest and resorted to the disastrous expedient of issuing paper money. The Central Government was embarrassed by such transactions in its own efforts to raise loans. Moreover, the new Immigration and Public Works Policy took out of the hands of the provinces many of their former functions. Their importance thus became steadily less. There were nine Provincial Councils in a population of a quarter of a million, and each of these nine was separate in taxation, land settlement, education, licensing, harbours, railways, etc. In most of these provinces there had grown up an elaborate system of government by responsible Ministries, together with an unwieldy parliamentary procedure and a somewhat farcical method of party government. By 1870 four provinces had become jealous of their more fortunate neighbours, while the South growled about the exactions of the North for the prosecution of the Maori wars. There was no tendency to union observable in the provinces, and while they remained isolated they were too weak to embrace any scheme of satisfactory progression.
Thus in the interests of the new national policy of railways and other public works the provinces had to be cleared away. In this chapter we have already seen the mischief wrought by them in utterly destroying the wise provisions of Vogel's measure, and in giving the construction and surveying into the hands of people much less experienced than the English railway builders which Vogel himself had in mind. When, in 1872, the jealous provincialists went so far as to defeat a wise measure for planting national forests to cope with the rapid deforestation Vogel hesitated no longer. In 1874 the Provincial Governments were abolished.
In Part I. we studied the scheme put forward by Vogel. In the present study we have seen that scheme in the hands of the New Zealand Parliament of the day. We have studied something of the grim struggle provoked by Vogel's scheme and of the faults which were allowed to creep into the newly propounded railway policy. What is more important, we have seen the clearing away of obstruction to the scheme, and we shall be in a position to appreciate the amazing progress made despite all these disabilities, and to see how in the birth of her railways we find the birth of New Zealand herself. In no other country probably have railways and national unity been so closely linked together.