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The Pamphlet Collection of Sir Robert Stout: Volume 61

A Shylockracy

A Shylockracy.

On the 18th of March last, Sir Julius Vogel was entertained by his constituents at a banquet in Christchurch, when he made a long speech, which he concluded by quoting these well-known lines of Goldsmith—

"Ye friends to truth, ye statesmen who survey
The rich man's joys increase, the poor's decay,
'Tis yours to judge how wide the limits stand
Between a splendid and a happy land."

Had Sir Julius commenced his speech by reciting these lines, any advocate for a National Bank might reasonably have anticipated that he would have promised his very best support to the establishment of such an institution.

Sir Julius Vogel's admirers say that he is a great statesman, a brilliant financier, and a most capable and clever man. But if he had really been a great statesman and a brilliant financier, and sincerely anxious to benefit New Zealand, he would immediately have recognized the immense advantages to be derived by the Government and people of the colony from the establishment of a National Bank. At any rate, Sir Julius Vogel is not such a "babe in finance" (as he called Major Atkinson some time ago) as not to be perfectly aware of the fact that the establishment of a National Bank would no more necessitate "a forced paper currency" than does the existence of the present banks. Yet he evaded the real question of a National Bank by declaring his virtuous abhorrence of "a forced paper currency."

Sir Julius Vogel professes himself to be desirous of encouraging the industries of New Zealand, but although no one can know better than himself how the present extortionate rates of interest are dis- page 7 couraging and ruining all industries, and especially the chief industry of agriculture, yet he hoped that no measure might he brought forward which the money-lending fraternity "would consider to be in conflict with their interests!!"

Sir Julius Vogel appeared very anxious not to incur the displeasure of the large companies, whose opposition he declared would be so "powerful" that any measure which they opposed would have no chance of passing. Sir Julius Vogel must have forgotten an old Roman proverb which his friend the Editor of the Lyttelton Times often makes good use of (when it suits him), "Salus populi suprema est lex." The people's welfare is the highest law. But great measures are for great statesmen, and Sir Julius Vogel preferred a small measure. Sir Julius Vogel ignored the substance of the State Bank scheme, and grasped at the shadow of cheap money.

Although Sir Julius Vogel could not, or would not see the infinitely greater advantages of a National Bank, he declared that it was "impossible to over-estimate the advantages which would result" from farmers being able to obtain small loans on landed security at from 5½ to 6 per cent, interest. Now, the establishment of a National Bank, by reducing the rates of interest on sound mortgage securities would assuredly have the speedy effect, through its influence upon the money market, of reducing the rates of interest upon all kinds of loans throughout the colony. A great general reduction of the rates of interest would tend wonderfully to encourage, develop and stimulate all kinds of industries in New Zealand, and this in its turn would completely do away with "the unemployed question," by finding work for every man in the colony, and this again would keep up a good rate of wages. Besides all these advantages (and those named are but a few of the advantages which would certainly result from the establishment of a National Bank), New Zealand would have the honour of initiating a new system of banking into the Australasian Colonies, which would be for the benefit of the people instead of for the benefit of the money-lending fraternity and their agents.

But Sir Julius Vogel was afraid of a powerful opposition to any scheme, which, though it might be for the benefit of the colony, would curb and diminish those extortionate and exhorbitant rates of interest, out of which so many bank shareholders, stockbrokers, money-lenders, lawyers and other parasites of industry "increase their joys" by becomming richer! Better let "the joys of the poor decay" than decrease the extortionate gains of the wealthy!

Sir Julius Vogel afterwards "shadowed forth," and has since brought before Parliament, a little measure called "The Mortgage Debentures Bill." This may have the effect of reducing the rates of interest from to possibly as much as 1 per cent, less than many farmers now pay on the same class of securities. This scheme has, however, what Sir Julius Vogel probably considers as advantages over the National Bank scheme. It includes the farce of pretending to bring more money out from England, and it would encourage and foster the employment of more companies, agents, and lawyers. "There is a page 8 tide in the affairs of man, which, taken at the flood, leads on to fortune." By ignoring the National Bank scheme, Sir Julius Vogel has missed a grand opportunity to establish his claim to be a great statesmen and brilliant financier. A few days after Sir Julius Vogel's speech, the writer of this pamphlet sent the following letter to the Lyttelton Times, just to challenge the money lending fraternity to give some better reason against the establishment of a National Bank than that their opposition would be too powerful to allow of it. Such a reason is simply an impertinence to the people of New Zealand. It would mean that the people of New Zealand are ruled by the money-lending fraternity of the United Kingdom, and of New Zealand and by their agents. The following is a copy of my letter:—

National Bank.

"To the Editor,—Will you kindly allow me a few more lines upon the above subject. From the remarks of Sir Julius Vogel upon 'cheap money,' it appears to me that the real objection to the establishment of a National Bank is that the other banks would not like it, and that the real difficulty is that there are a great many very wealthy and influential men in New Zealand who would like to keep up the present usurious rates of interest. They object as much to have the interest of money lent upon the security of land, reduced to 3½ and 4 per cent., as English landlords object to the great reductions in their rents, or as New Zealand farmers object to selling wheat at 2s. 6d. per bushel. But if, as Sir Julius Vogel admits, the lending of money to farmers at and 6 per cent, interest would be a great benefit to the country, "by making two ears of corn (and two blades of grass) to grow where before only one grew," how much greater would be the benefit of reducing the rates of interest upon mortgages of land to 3½ and 4 per cent.? Those interested in the present colonial banks object to Government assisting the people who want to borrow money, or to get credit upon first-class securities by the establishment of a National Bank, but the people of New Zealand have a far greater right to object to Government assisting the banks to lend money by allowing them to issue bank notes instead of money. Now, as to the statesmanship of a Government interfering with usury, I refer both the opponents and advocates of the establishment of a National Bank to the authority of Lord Bacon. In his essay, 'Of Troubles and Seditions,' he thus wrote 'Above all things good policy is to be used, that the treasures and monies in a State be not gathered into a few hands; for otherwise a State may have a great stock and yet starve. And money is like muck, not good except it be spread. This is done chiefly by suppressing, or at the least keeping a straight hand upon the devouring trades of usury, engrossing, great pasturages, and the like.' Now the chief reasons for the desirability of establishing a National Bank are, that the present colonial banks not only are permitted to make an enormous profit by circulating their own notes instead of gold and silver, but they charge what at the present time amounts to a 'devouring' rate of interest upon the credit they give in exchange for first-class securities. The establishment of a National Bank no more necessitates 'a forced paper currency,' than does the existence of the present colonial banks. Neither would it necessitate a larger amount of gold and silver in the National Bank than is now in the colony, and which does not amount to £2,000,000. Nor would it necessitate a larger number of bank notes than the aggregate now issued by the present banks. Nor would the capital required by Government to establish a National Bank exceed the nominal capital of all the present banks, which is about £5,000,000. As the customers of the banks require but very little gold and silver in proportion to bank-notes (especially where £1 notes are current), so they require but few bank notes in proportion to their payments by cheques, and to their credits. It remains for the opponents of a National Bank to give some better reason than that their opposition will be too powerful to allow of it. They must either show that a National Bank would not benefit the colony, or else, why the colony should exist for the benefit of the banks and moneylenders. 'salus populi suprema est lex.' But, like ancient Shylock, 'they want their moneys,' and 'they want no speaking.'—Maori."

page 9

This letter, however, did not appear in the Lyttelton Times, so, about a fortnight afterwards, it was followed by a note to the editor requesting him to insert the usual "Declined," or the information that the letter had miscarried. But the editor had not the courtesy to make any reply whatever, neither did he print the letter. What was the reason? Is the Editor of the Lyttelton Times afraid of the powerful opposition of the money-lending fraternity? And is the money-lending fraternity really so weak that it cannot afford to have the subject ventilated, and was it desired to try and smother up the question? But when a clever and capable man like Sir Julius Vogel has nothing better to say against a National Bank than that there would be a powerful opposition against it, what is to be done? Did Sir Julius Vogel (the Prime Minister of the Lyttelton Times) taboo the subject? Possibly the editor may be able to explain. However, as he had neither the pluck to insert the letter, nor the manners to answer my note, a copy of the letter was forwarded to the Press, in which paper, after about another fortnight's delay, it appeared. (The nomme-de-plume, however, had been changed to "Pericles").

But although there are so many clever and capable men in Christ-church belonging to the money-lending fraternity, and although Christchurch swarms with lawyers and clerks who are the humble and obedient servants and agents of the modern Shylocks, yet none of them answered the letter. The inference is, that they have no better arguments against a National Bank than the good old rule, "that they shall take who have the power, and they shall keep who can."

"An ante," wrote Bacon, in his quaint old English, "is a wise creature for it selfe; but it is a shrewd thing in an orchard or garden." We have many wise creatures for themselves in Parliament, but it is to be feared that they are very "shrewd things" as regards the interests of the colony.

Sir Julius Vogel claims £6000 as commission upon some loan effected by him. As the establishment of a National Bank would do away with the necessity of any further foreign loans, Sir Julius Vogel might not regard a National Bank as a good thing for himself. But if by the establishment of a National Bank, not only such a nominal capital could be raised in the colony as would, for instance, make the West Coast Railway, but save such a charge as that of, £380,000 for underwriting, it is evident that London Stock Exchange men and their friends will never approve of Colonial National Banks.

After the before-mentioned speech of Sir Julius Vogel, the chairman invited questions. Amongst them was the following:—"Will Sir Julius Vogel bring in a Bill for the issue of National Bank notes and press for a division, so that the public may know the members who vote for and against it?"

Sir Julius Vogel answered that he had previously stated his views (viz., that he hoped no measure would be brought forward which the money-lending fraternity would consider to be in conflict with their interests), and pretending that National Bank notes meant "a forced paper currency," he said that he should be very sorry to be the means page 10 of bringing about a state of affairs which would increase the price of every article consumed in the colony probably 30, 40, or 50 per cent.

Now, how it should happen that the withdrawal of the right of issuing bank notes from the present banks and the issuing of the same amount of Government notes, payable on demand in gold to the banks, should raise the price of every article consumed in the colony, 30, 40, or 50 per cent., is more than Sir Julius Vogel can explain. But although Sir Julius Vogel and nearly all of the representatives of the people really seem to be afraid of the banks and money-lending fraternity, there are about half-a-dozen free and independent members in Parliament who can and will speak plain English.

The free and independent electors of New Zealand are compelled by law, if they vote, to vote secretly by ballot, in order that those of them who are not free and independent may not be compelled to vote as their masters require, and in order that dishonest voters may enjoy the inestimable advantage of promising their votes one way and then, after all, voting as their conscience bids. The advantages of the ballot are however not very clear if the representatives of the people are not themselves free and independent. But during this last session our legislators have been told to their faces—and they have not contradicted it—that they are all under the banks and money-lending fraternity. So that New Zealand may, if this is true, be said to be governed by neither aristocracy nor democracy, but by a "Shylockracy!"

On the 1st of July, 1885, in a Want of Confidence Debate, in the House of Representatives, Mr. Turnbull said:—

"Any Government on those benches will have to yield to the banks. There is not the slightest doubt about that. If any Government to-morrow attempted to establish a State Bank of Issue, or proposed to lend money at a low rate, they would be off those benches before a week had passed. Such is the influence that the banks and money-lending companies have in this House. It is of no use for us to pretend that it is not so; it is. I am telling members what are the real facts of the case. We are entirely under these large money-lending corporations." (Hansard, vol. li., P. 322.)

On the 15th of July, 1885, in the Legislative Council, in a debate on his Bank of Issue Bill, the Hon. Mr. Bathgate said:—

"We all know that the Government is so intermixed with a powerful monetary institution that it would require braver men than perhaps even our present Government to take the initiative in such a transaction. There is no use mincing the matter. We all acknowledge the power of the Bank of New Zealand in the colony. It is a power behind the throne, a power behind the State as it were. Its action is felt everywhere, and it is no wonder that successive Governments may find it rather difficult, although the Government should be satisfied that it is imperatively required, to take any step that the inmates of the Bank parlour might possibly object to."—(Hansard, vol. li., p. 588.)

These words give another sound argument for the establishment of a State Bank. "Fire is a good servant, but a bad master." It is evident that we require a State Bank to counterbalance the power of the present banks! New Zealand may as well be ruled by foreign bayonets as by foreign banks. It is simple usurpation and it is a degradation to the people of New Zealand to submit to it. And if the present Members of the Legislative Council and of the House of Representatives are page 11 afraid of the banks and of the money-lending companies, it proves that they are not fit men to represent a free nation. The electors of New Zealand have a right to demand that their representatives shall either promise to vote for a State Bank, or at least to give some valid reasons for not doing so. New Zealand has lately shared in the prestige given to the colonies by the sending of a contingent by New South Wales to the Soudan, and the colonies have been said to be true cubs of the old lion. But Lord Bacon, in his essay "Of Kingdoms and Estates," wrote:—"The blessing of Judah and Issachar will never meet; that the same people or nation should be both the lion's whelp and the ass crouching between burdens; neither will it be, that a people overlaid with taxes should ever become valiant and martial. It is true that taxes levied by the consent of the estate, do abate men's courage less; as it hath been seen notably in the excises of the Low Countries; and in some degree in the subsidies of England. For, you must note that we speak now of the heart, and not of the purse; so that, although the same tribute and tax laid by consent or imposing, be all one to the purse, yet it works diversely upon the courage. So that you may conclude that no people overcharged with tribute is fit for empire."

The banks and money-lending fraternity of New Zealand and their agents object to the establishment of a State Bank, simply because that tribute," otherwise the taxes and interest on loans paid by the people of New Zealand, would be reduced, and because the Government of New Zealand would then withdraw from the present banks of the colony that right of issuing their own notes, which is an equivalent to them of a loan to the value of above a million at 2 per cent interest, by the people of the most "debt-ridden spot in the world,"—and this too at a time when, according to Sir Julius Vogel, the value of gold is greatly "appreciated,"—and when the Estimates for Public Works have been cut down by half a million. Under these circumstances the people of New Zealand much more resemble "the ass crouching between burdens "than" the lion's whelp."

On the 14th July, in the House of Representatives, in a debate upon the Local Bodies Finance, Sir Julius Vogel said:—

"Surely it is my duty to protect the reputation of the colony; and . . . . therefore . . . .I have taken out a balance-sheet showing what is the real position of this colony, which, we are told, is so overburdened with debt that all revenue passes away abroad. These figures are, I believe, under the mark, especially those regarding the value of the public works. They are taken out on the basis on which the wealth of all nations is estimated for statistical purposes. I find that the assets taken on the 31st March, 1883, were—Real property, exclusive of Maori property beyond five miles from a road, £101,000,000; personal property, £64,000,000. Now, this is the estimate of our public works, and I think it is too small—£16,000,000 for railways, telegraphs, lighthouses, public buildings, harbours, and water-works on gold-fields . . . .That leaves a total amount of £181,000,000 as the amount of the assets, and I would point out to honourable members also that it includes the indebtedness within the colony to persons within the colony, and the indebtedness for mortgages to people within the colony. It is a great fallacy to suppose that the chief indebtedness on mortgages exists outside the colony. By calculations which were made in 1883 it is shown that mortgages are held in nearly equal amounts inside and outside the colony; namely, £15,000,000 inside the colony and £15,000,000 outside the colony. Those within the colony appear page 12 on each side of the assessment for real property, and the other debts appear on each side of the assessment for personal property. We, therefore, need not take this local indebtedness into account, but we have to take the indebtedness outside the colony into account, and that amounted on the 31st March, 1883, to £27,783,000 as the debt of the colony after deducting accrued sinking fund. The debts of the local bodies were £4,197,000; foreign mortgages, £15,000,000; and debts due to persons outside the colony, £7,000,000—making in all £53.000,000, and leaving a surplus balance of wealth to the colony of £127,000,000. This colony is not that distressed and impoverished country which some honourable gentlemen seem to think it. That gives an average to each individual of £227, and when I turn to statistics I find that it makes us one of the richest countries in the world. Great Britain is returned in 1882, on the same basis of valuation as I have taken, as having wealth per inhabitant of £249, as against our £227; but other countries have very much less. France, for example, is put down at £218, Germany at £140, Russia at £53, Austria at £95; Holland again comes up rich at £240. The Australian Colonies are put down at £197 per head; so that we are above the average of the Australian Colonies."—(Hansard, vol. li., p. 579.)

But "a State may have a great stock and yet starve," and "a splendid land" may not be a "happy land."

In the year 1884 (according to the Otago Daily Times), out of every 672 persons in the colony of New Zealand, inclusive of women and children, one became bankrupt. Their liabilities amounted to nearly half a million, and they paid an average dividend of about 1s. pd. in the pound!

Sir Julius Vogel said he considered it his duty to protect the reputation of the colony. Surely it is far more the duty of the Colonial Treasurer to protect the interests of the colony, by doing all he can to check that "usury" of which Bacon wrote, "it is the canker and ruin of many men's estates, which in time doth breed a public poverty."

Readers of this pamphlet may be interested to know that previous to Lieutenant Farmer's legal experiences, and long before his connection with Her Majesty's Regiment of Horse Marines, the real name of this "left-tenant-farmer" (or, as it pleases him to subscribe himself, "Lieutenant Farmer") appears in the Doomsday Book of England, for 1873-4, as a small Sussex landowner. Since then he sold his land (which did not realize him 3 per cent, upon its value in rent), and invested his own capital to the extent of £10,000 in growing corn and meat in England. But, although the total of rent, tithes, and taxes barely amounted to 4 per cent, upon the value of the land, such was the influence of free trade upon the value of the produce of that land, and upon "the prospects of farming," that Mr. Farmer thought well to accept his commission in Her Majesty's Horse Marines. This "commission" he may be said to have "purchased" by the loss of some thousands of pounds out of his original capital. That it is easy to lose money by farming in England unhappily needs no proof, but the fact may interest New Zealanders that during the five years ending Sept., 1879, Lieutenant Farmer expended no less than £1000 in poor rates and highway rates, above £800 in tithes (lay, rectorial, and vicarial), and about £6000 in wages; without reckoning rent, and tradesmen's bills, etc. Lieutenant Farmer believes that rent, tithes, and taxes in England amount to the same thing in principle as interest and taxes in New Zealand (only that English landlords are content with 2½ per cent, interest on the value of their land), and page 13 that it does not signify how high are the rents or rates of interest and taxes, so long as the farmers have a fair chance of making "a fair profit;" on the other hand, that any rent or rates of interest, however low, which takes away from the farmers "the means by which they live," or drives them out of a country, is an extortionate rent, rate of interest, or taxation, which is a disgrace alike to those who exact it and to those who submit to it. Lieutenant Farmer neither asked nor received the slightest abatement of rent, tithe, or taxation, and therefore during that "unprecedented cycle of unfavourable seasons" and of miserably unremunerative prices, bore the whole losses connected with the thousand odd acres which he farmed. He, however, believes that in common with the tenants of Sir Henry Brand (who, however, was not his landlord), he might have received an abatement of 10 per cent., or £10 upon his last payment of £100 odd lay tithe. Lieutenant Farmer, however, wrote the cheque in full (possibly abatements were not intended on tithe), thereby reserving to himself the right of challenging Sir Henry Brand, or, as his waggons and carts then duly declared him at that time to be, "The Right Honourable the Speaker," or, as the inscription thereupon now probably runs, "Lord Hampden." (Possibly under the present more "sunny" condition (?) of British agriculture, Lord Hampden may now have added a coat of arms to the decorations of his agricultural vehicles!) Lord Hampden, during the Lieutenant's "tithing" time, attributed all tenants' losses simply to "absence of sun." (For which, of course, the landlords were in no wise responsible, and the probability of which the tenants ought to have foreseen!)

In the pages of the London Agricultural Gazette for the years 1878 and 1879, Lieutenant Farmer, under the nommc-de-plume of "Selim Pasha," has often challenged the 'landlords and freetraders to discussions, in which he is so sure that he had the best of the argument that he intends to republish what he himself wrote, with an epitome of the answers and arguments of his adversaries. "Selim Pasha" might also probably be remembered by a few of the readers of that old English agricultural paper, Bell's Weekly Messenger, as the "Blankshire Reporter." Again, in Punch, Nov. 30th, 1878, is there not to be seen a picture from the hand of "Jeremiah Mangoldwurzel," another alias of the Lieutenant's. The title of the picture is "Farming Prospects." Singular and interesting to say, this picture if turned upside down (to allow for New Zealand being the antipodes of England, of course) gives, the artist believes, a most faithful representation of "Farming Prospects" in New Zealand and the other English colonies at the present time, unless State Banks are established, or, unless England shuts out foreigners like Russia, South America, and the United States in favour of her own colonies! Otherwise, Lieutenant Farmer maintains, that British emigrants may as well go to La Plata, or Hindostan, or Kamschatska, or, indeed—stay at home.

If Sir Julius Vogel would like the real name and address of the writer of this pamphlet, doubtless the editor of either the Lyttelton Times or the Press will oblige him and the writer by giving it.

The Lyttelton Times and Press of Christchurch both seem to be, page 14 like our representatives in Parliament, afraid to advocate anything "which would be in conflict with the interests of the banks and money-lending companies!" The Temuka Leader, which claims to have originated the idea of a State Bank for New Zealand, stands out in honourable contrast, in the plucky and disinterested way in which it fights for the right. Lieutenant Farmer begs to acknowledge that to the perusal of a letter from Mr. J. M. Twomey (the editor of the Temuka Herald) to the Lyttelton Times, he (the Lieutenant) owes the origin of all his own ideas upon the subject, also the figures as to New Zealand banking capital.