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The Pamphlet Collection of Sir Robert Stout: Volume 65

The Financial Condition of New Zealand; Facts and Figures for the People. Being a plea for a more equitable adjustment of taxation, etc

The Financial Condition of New Zealand;

Facts and Figures

Printed at the Evening Post Office Wellington Willis Street.

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Oh Fountains! when in you shall I
Myself, eas'd of unpeaceful thoughts, espy?
Oh Fields! oh Woods! when, when shall I be made
The happy Tenant of your shade?
Here's the Spring-head of Pleasure's Flood,
Where all the Riches lye that she
Has coin'd and stamp'd for Good.


"And everywhere a doleful and monotonous spectacle, the women and girls who toil all day with feverish energy for their miserable wage. Every where the life that is not life; the same slavery, the same oppression. The Children of Gibeon (Besant).

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The following little pamphlet was written in the spare moments of a busy practice, and published at weekly intervals in the columns of the "Evening Post," of this city. The author is conscious of many shortcomings, but he sends it forth in the hope that it may contribute something at all events towards the general good.

George W. Cole.

Wellington, New Zealand,
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The Financial Condition of New Zealand.

"Salus populi suprema est lex."

There remains an aspect of this question not yet sufficiently investigated, concerning which it is my desire to draw attention.

It is quite clear from the Financial Statement of our Colonial Treasurer that this Colony is in grave monetary difficulties. It is true that, by a skilful manipulation of figures, the Colonial Treasurer has done his best to hide the gravity of the situation, and for our Colonial credit, perhaps we ought to be grateful to him for having tried to shield us from outside criticism. But many are of opinion that the time has come when the people should know the worst, so that a remedy, if remedy there be, may be now applied before a worse condition arises, and that a worse condition may rise there is very little doubt, unless something be done to stem the tide of national misfortune which is apparently threatening to overwhelm us at no distant date.

What that something may be it is the purpose of this letter to indicate. Meanwhile, referring to the Financial Statement, it is bund that our
Private Debts amount to £20,305,593
Mortgages 31,821,101)
Debts of Local Bodies 5,616,273
Public Debts (less Sinking Fund) 31,688,349
Making a total of £89,491,324
Now, what means have we of liquidating this enormous liability. Here are our official assets:—
Live Stock £8,634,188
Wool and other Produce 854,481
Merchandise (including goods on consignment) 9,199,121
Household Goods 4,288,124
Money Due, secured by mortgage 26,181,610
Debts Owing to Persons 8,822,153
Other Property 11,145,535
Making a total of £69,125,212
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True, in the Financial Statement we have other assets, such as Crown lands, £13,800,728; railways, harbours, telegraphs &c., hut as none of these are available assets, they cannot be used for the purpose of liquidating our outstanding debts. Indeed, two items that we have already included, namely, household goods and debts owing to persons, are not really assets. As to the former, we cannot live out of doors nor in empty houses; and as to the latter, everyone is aware how little reliance can be placed upon receiving anything like what is really due.

We may fairly assume, therefore, that we are at least about thirty millions upon the wrong side of the ledger! It may very naturally be asked, how has this great deficiency come about? Doubtless it will be answered that the construction of railways harbours, building, &c., have placed this debt upon us, and it is usual to blame our present Colonial Treasurer for all the trouble Nothing to my mind can be more unjust. Certainly at present it would at first sight appear that the Colony has undertaken these huge responsibilities before it was financially able to [unclear: bear] the burden. But I think it can be shown that the Colony is quite able to afford those public conveniences, if its affairs be properly managed.

It follows, therefore, that the originator of these public works is not to blame, but that there are other causes in operation to account for our present embarrassments. No doubt we have squandered large sums of money in various unproductive directions, in wilful extravagance, and in other questionable under takings, but the chief trouble is not to be found amongst any such circumstances, but rather in the fact that successive Governments have allowed vast tracts of land to be alienated from the public estate without any adequate return.

In former days huge blocks were sacrificed for a mere nominal sum, till no less than seventeen million acres of land have now become alienated from the Crown. It has come about, therefore that a goodly portion of these private lands is lying comparatively unproductive.

Everyone knows that the Property-tax valuation is anything but excessive, and yet, according to its returns, there are individuals owning land in this Colony valued at nearly half a million sterling, and I could mention the names of 37 persons, none of whom own land of less value than £100,000; the 37 owning, in the aggregate, land valued at pretty nearly £6,000,000 sterling!

I am perfectly aware of the difficulty and danger in approaching all such questions, especially as both our legislative chamber are occupied by land-owners, the money value, as far as the land is concerned, of the Lower House being something like £897,324, and of the Upper £1,266,472 sterling. But that is no reason why public attention should not be drawn to the question.

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It may be as well to state in this place that there are 1140 absentees. A knowledge of this will be an important factor in our calculations by-and-by, for it can be readily understood how little such persons contribute towards the public revenue.

Then there are 11,000,000 acres leased, from which the public revenue derives only some £192,403, being an average of something like 3¾d per acre!

It comes to this, therefore, that large fortunes have been made by individuals out of the public estate.

I am not one of those who would confiscate land, nor would I prevent any man holding a freehold in the country in which he resides; but what I, in common with many others, do object to is that vast tracts of land should be given to speculators and landsharks.

And now for the practical bearing of these remarks.

In the Property-tax returns, Crown lands in 1885 were assessed at £13,675,516, whereas in 1882 they (including over 1,000,000 acres since sold) were assessed at £8,500,000.

Now, how comes it that with over 1,000,000 acres less, land is worth £5,175,516 more? Simply, of course, that owing to settlement and public expenditure the land has risen to its present value.

Very well, then, add the value of the land sold between those periods, namely, £358,962, and we obtain £5,534,478 sterling, as being the actual rise in value of the Crown lands within the period of three years. The Crown lands consisted of something (like 49,000,000 acres (for the sake of simplicity, let the mention of all lands of no value whatever, such as the tops of mountains, &c., be omitted).

Then this instructive and suggestive circumstance becomes manifest, that if the 49,000,000 acres of Crown lands have advanced in price to the amount of five and a half millions sterling, then the seventeen million acres of private lands must have advanced proportionately.

In round numbers, the gain would be two millions sterling, altogether apart from the enormously enhanced value of town lands!

This would equal a little more than one shilling per acre per annum as the unearned increment, and would constitute a fair basis for taxation. Now this portion of wealth is showered into the land-owners laps, altogether apart from any exertion, merit, or expenditure of their own.

Is it not just, therefore, that wealth so obtained should submit to be taxed, and taxed heavily?

Supposing one-half only were handed over to the public estate, our revenue would then be enriched by half a minion a year, and as a contribution from country lands only, by the imposition of such a tax, the vast tracts of land lying idle and page 8 comparatively useless and locked-up from the people, would be made to bear a more equable share of the public burden. Add to this the natural increase that will accrue year by year in the value of Crown lands not yet alienated, and it will be found that a yearly revenue of at least three and a half millions sterling may be thus secured. And this without taxing the product of labour nor the necessaries of life one farthing.

Carrying our investigation somewhat further, we gather from official statistics (1882) that the total freeholders in this Colony number 71,240 persons, out of a population of 517,507 individuals.

These figures indicate, therefore, that 87 persons out of every hundred are without land, and deducting all those whose holdings are of less extent than five acres, it will be seen that the principal portion of the land already sold is apportioned amongst 5 per cent, of our people.

Looking at the question in this way, our dangerous approach to that undesirable state of matters, which in Great Britain has resulted so disastrously to millions of her inhabitants, becomes manifest. In that country comparatively few have any proprietary interest in the soil, one-half of the country being owned, it is said, by a thousand persons, and four-fifths of it by less than six thousand individuals.

The following tables (from Mulhall, page 272) will illustrate how such an iniquitous state of affairs has come about.
Land Owners in United Kingdom. A.—Over 150,000 Acres.
Argyle, Duke 175,000
Athol, Duke 195,000
Baillie, E. 166,000
Berridge, R. 170,000
Breadalbane, Marquis 438,000
Buccleuch, Duke 460,000
Devonshire, Duke 193,000
Fife, Earl 258,000
Hamilton, Duke 157,000
Lovat, Lord 162,000
Mackenzie 165,000
Matheson 627,000
Middleton, Lord 1,006,000
Northumberland, Duke 186,000
Portland, Duke 162,000
Richmond, Duke 286,000
Ross, C. W. 167,000
Scafield, Earl 306,000
Sutherland, Duke 1,358,000
B.—Rentals Over £100,000 Per Annum.
Anglesea, Marquis £107,000
Bedford, Duke 142,000
Buccleuch, Duke 231,000
Bute, Marquis 232,000
Calthorpe, Lord 123,000
Derby, Lord 170,000
Devonshire Duke 170,000
Downshire, Marquis 100,000
Dudley, Earl 123,000
Fitzwilliam, Earl £136,000
Haldon, Lord 109,000
Hamilton, Duke 141,000
Norfolk, Duke 270,000
Portland, Duke 140,000
Ramsden, J. 175,000
Northumberland, Duke 1,76,000
Sutherland, Duke 142,000
Tredegar, Lord 125,000

No one need be surprised to learn, therefore, that, out of a population of thirty-four million, there are a million destitute people, that is to say, of course, that one person out of every thirty-four within her borders is absolutely without the means of subsistence. That this destitution actually results from land page 9 monopoly may be still further illustrated by comparing Great Britain with some country where no such monopoly exists.

Take France for example, where three-fourths of her inhabitants have a proprietary interest in the soil, then, what do we find?

We find that with a population of thirty-seven million she has 417,000 paupers only. That is to say the United Kingdom has three million less inhabitants to feed, and yet she possesses nearly three times as many paupers as her neighbour.

It must be admitted that these facts and figures are of grave import to ourselves, for have we not already tasted the fruits of a like mismanagement, as evidenced by our present monetary embarrassment and premature poor-rate? Just think of the circumstances which, in a fruitful and sparsely-populated country like our own, can have brought about the necessity for a poor-rate!

A cry has arisen, however, which, oblivious of the circumstances we have endeavoured to bring to light, seeks to cast the blame upon the assumed backwardness of our industries, and it is stated by men of undoubted ability that all we require is more protection for these, by a general increase in our import duties, in order that universal prosperity be established.

The assumptions we have now to examine are:—
  • First—"That our present financial difficulties arise from undeveloped industries," implying, therefore, that they are comparatively backward, and that the prosperity of a country depends upon their diversity and magnitude.
  • Second—" That our industries, and our country, would be benefitted by a more highly protective (?) tariff."

There is no great difficulty in proving these suppositions utterly without foundation.

Take, for example, the number of persons already engaged in those pursuits in this Colony, and what do we find? We find that our industries give employment to 76,427 persons. That is equivalent to a proportion of 13.21 per cent. This will be found to compare very favourably with the number of those similarly employed in other countries. Take the United States, and, contrary to all expectation, we find the percentage actually below our own. In that country, after one hundred years of a so called protective tariff, the proportion of her inhabitants engaged in industry amounts only to 12.0 per cent.! Then, take any country you like. Russia indicates 5.0 per cent.; Italy, 7.0 per cent.; Austria, 13.0 per cent.; Spain, 8.0 per cent.; Holland, 12.0 per cent.; Scandinavia, 9.0 per. cent.; and Portugal, 8.0 percent. The only countries, in fact, bearing a larger proportion, being Belgium, Germany, France, and England!

So much for the backwardness of our industries.

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If, upon the other hand, we institute a comparison of those engaged in agricultural pursuits with those similarly engaged abroad, the difference becomes very startling indeed. Thus whilst our proportions percent, amount to 11.27, the following is the percentage of some other countries, namely—England 14.6 per cent.; France, 51.0 per cent.; Germany, 43.0 per cent; Russia, 81.0 per cent.; Austria, 55.0 per cent.; Italy, 70.0 per cent.; Portugal, 45.0 per cent.; Belgium, 40.0 per cent.; Holland, 58.0 per cent.; and Scandinavia, 61.0 per cent.

But we shall have to refer to this further on. Meanwhile we proceed to enquire as to the truth of the statement that the national welfare depends upon the diversity and magnitude of its industries.

We are told to look abroad and note that where wealth and prosperity abounds, there we shall find diversified industries. Astounding discovery! But let us not mistake cause for effect.

"The development of industry is of the nature of an evolution which goes on with the increase of population and the progress of society, the simpler industries coming first and forming a basis for the more elaborate ones. In new countries the industries which yield the largest comparative returns, are the primary or extractive industries which obtain food and the raw materials of manufacture from nature. The reason of this is, that in these primary industries there are not required such costly tools and appliances, nor the co-operation of so many other industries. The people of new countries can, therefore, get the largest returns for their labour by applying it to the primary extraction industries and exchanging their products for those of the more elaborate industries that can be best carried on where population is denser. As population increases, the conditions under which secondary or more elaborate industries can be carried [unclear: or] gradually arise."

Just so; to say then, that a nation's progress depends upon is industries, is to reverse the order of things, to assert a manifest absurdity. It would be as sensible to say that the growth of our bodies depends upon the development of our nails! or that the stability of a plant depends upon the luxuriance of its foliage. Doubtless, in the latter case, the one reacts upon the other; but in the first place the foliage is an index merely as to the vitality of the plant.

How idle then the cry,
"Encourage local industry,"

except by such means as shall legitimately bring vitality to the nation, and how preposterous to assert that this can be accomplished by any such form of increased taxation!
We are now led to approach the second assumption put forth namely—

"That our industries and our country would be benefitted by a more highly protective (?) tariff."

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You notice, I have myself inserted, an interrogative note after the word protective, in order to express my dissent from the assumption that high duties are protective. As I wish to handle this question from a new stand-point, I do not intend to dwell upon any arguments such as are commonly employed, and which admit of endless elaboration. Thus we might follow out in detail the injurious effect upon industries themselves, owing to the increased cost of the raw materials entering into the product of their manufactures. Upon this point I shall content myself by quoting an American writer of modern date. He says—"If there is one country in the world where the assumption that protection is necessary to the development of manufactures and the 'diversification of industry,' is conclusively disproved by the most obvious facts, that country is the United States. The first settlers in America devoted themselves to trade with the Indians and to those extractive industries which a sparse population always finds most profitable. . . . But without any protection, and in spite of British regulations intended to prevent the growth of manufactures in the Colonies, one industry after another took root, as population increased, until at the time of the First Tariff Act, in 1789, all the more important manufactures, including those of iron and textiles, had become firmly established. But so heavily are our manufactures weighted by a tariff, which increases the cost of all their materials and appliances, that in spite of our natural advantages and the inventiveness of our people, our sales are confined to our own protected market, and we can nowhere compete with the manufactures of other countries. In spite of the increase of duties with which we have attempted to keep out foreign importations and build up our own manufacturing industries, the great bulk of our importations to-day are of manufactured goods, while all but a trivial percentage of our exports consist of raw materials! Even where we import largely from such countries as Brazil, which have almost no manufactures of their own, we cannot send them in return the manufactured goods they want, but to pay for what we buy of them, must send our raw materials to Europe!"

That this is not the language of exaggeration will be conceded by those who are familiar with American history.

Were you to ask me to give an example warranting such a serious charge against protection in America, I would refer you to her shipping industry.

Everyone knows that at one time her stately and beautiful vessels roamed the sea in numbers second only to those of Great Britain. But as protective duties have increased her shipping has decreased, until that industry has been well nigh ruined. Should anyone desire proof of this, let him consult the work of the Bight Hon. Henry Fawcett upon Freetrade, page 35, and he will find these words:— page 12

"Rather more than twenty years ago 75 to 80 per cent, of the total commerce of the United States was carried in American vessels. The protectionist policy of the United States has received its greatest development since that period, and within that time the mercantile marine of the United States has so diminished that about 80 per cent, of her commerce is now carried in foreign vessels, chiefly English!"

I shall trouble you with one other example, and I give it you upon the authority of an American artisan. He says—

"We are constantly making improvements upon the tools, methods, and patterns elsewhere in use. These improvements are constantly starting a foreign demand for American manufactures which seems to promise large increase. But before this increase takes place the improvements are adopted in countries where manufacturing is not so heavily burdened by taxes on material, and what should have been peculiarly an American manufacture is transferred to a foreign country. . . . The American inventor, if he hold an English patent, finds more profit in manufacturing it abroad."

A protective tariff then, instead of encouraging local industry and insuring employment of labour, tends directly in an opposite direction.

Since such is the case, it cannot be said that it is beneficial to the people. That it is not so, becomes still more apparent from a consideration of the extreme danger incurred by the community, consequent upon the ease with which trade monopolies may be established by its aid.

Everyone knows what happened in the United States, when the output of copper, for example, was limited to certain mines. Why, for this product of their own soil, the American citizen was actually charged 2d per pound more than the foreign purchaser! Then, would it be to the interests of the people for such a state of matters as the following to be rendered possible?—

"Half-a-dozen representatives of the ' anthracite coal interest' met last evening (24th March, 1880), in an office in New York. When they separated, they had come to an understanding among gentlemen to restrict the production of anthracite coal and advance its price!"

Half-a-dozen gentlemen, aided by protection, deliberately determining to cast out of employment hundreds of men, unmindful of the consequent suffering and distress that must necessarily follow, in order that they might enrich themselves.

Permit me to go one step further, and point out this undesirable feature, inseparable from all import dues, whether [unclear: assessed] in the interests of protection or revenue, namely, the unequal pressure sustained by various classes or the community under page 13 its tariff. This will readily appear by an analysis of the different items of revenue contributing to our annual expenditure.

For the year ending 31st December, 1885, our expenditure amounted to £6,962,799 sterling. Out of this, Customs contributed £1,422,052, an amount equal to one-fourth of the whole expenditure, as against one-twenty-fourth contributed by the Property Tax.

That this is not a fair distribution becomes all the more certain when we consider the relative value of the imports upon the one hand, and of the contributing property on the other.

The value of the imports contributing £1,422,052 was between seven and eight millions sterling, whilst the property contributing £281,257 was upwards of £90,000,000. Then, according to Table 8, Property-tax returns, there are 34,450 persons possessing freehold land valued at £53,658,687. Now, what do you suppose the revenue receives from this great wealth? Why, something like £181,657 only.

I have roughly estimated the area of lands so held at twenty thousand square miles. Now, as the total area of this Colony only amounts to a little over one hundred thousand square miles, these 34,450 persons, therefore, hold one-fifth part of it.

It follows therefore that, were the whole of the lands of our Colony assessed at a similar rate, then the entire revenue obtainable would fall short of that obtained through the Customs by half a million sterling!

We find from another official table that there are 768,281 acres of freehold land returned as unoccupied and unused, that is to say, there are 1200 square miles of country held by private individuals or companies absolutely going to waste!

Notwithstanding these comparatively neglected sources of revenue, and the severity of our present Customs tariff, it is seriously proposed to increase the latter by £186,000. We may consider the effect of this in several ways.

Distributing the State's yearly expenditure, per head of the population, we find £12 represents the annual indebtedness of every man, woman, and child amongst us, and out of this £2 10s is already charged to Customs. An increase by £186,000 would bring up the tax to £2 16s 4d. Dividing the value of imported goods in the same manner, we ascertain that the amount per head would be £13 per annum. Now, mark what follows—

Property is charged at the rate of 13-16th of a penny in the so that for every £13 of property one would be charged 11¾d, whereas for every £13 of imported goods one would have to pay £2 16s 4d! That is 4s 4d in the £, an amount in excess of that I charged upon property by 442 per cent! Is this a fair distribution of taxation?

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Suppose property were charged at the same rate, what would the revenue gain in place of the £281,257 now yielded by the £90,000,000 of taxable real and personal estate? The revenue would gain £18,000,000 sterling.

The consumer of Customs imports has to pay this enormous tax upon his goods whether he be in credit or the reverse, whereas the property-owner pays no tax except upon his credit balance.

A person imports, we will say, goods to the value of £1000, upon this he pays a toll of £216 13s 4d, even if his liabilities swallow up the whole of it; upon the other hand a person owning property to a similar amount, if it be all to credit, pays a toll of £3 6s 8½d only, and were he in debt to a similar amount he would contribute absolutely nothing!

Clearly, then, so far as there may be any protection in the matter of increased Customs dues, it is a protection of the estates of the wealthy at the expense of the commodities of the poor. A weekly contribution of 1s 1d,* extracted from the toilers amongst us, from those who receive no compensating advantages, and who are conscious that the tax thus paid is for interest on money borrowed to enrich the land of the speculator and monopolist!

In a former letter I drew attention to this remarkable circumstance—that, whereas the percentage of those amongst us engaged in industrial pursuits was very large, being, in fact, fifth upon the list, of all nations, the percentage of those engaged in agriculture was very small, being, in fact, at the very bottom of the list.

Now, this is a matter of the most vital importance for our consideration. What is the meaning of it?

Looking abroad, we note that next to ourselves Great Britain has fewest thus employed. The reason is not far to seek.

In Great Britain only some half per cent, of her people have any proprietary interest in the soil, as against from 4 to 14 per cent, in other countries. The result is that it does not pay to cultivate the land under such circumstances, and as rent is gradually rising, so is agriculture gradually declining. How can a farmer profitably employ his labour, having to pay a rental of 24s an acre?

What then is the lesson for ourselves?

One often hears it remarked that farming does not pay Quite true; how can it pay when in too many cases the farmer has to pay a heavy royalty to the money-lender?

Here, then, we have the secret revealed. England's agricultural depression and our own are due to similar causes.

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Liberate the land from the extortionate landlord upon the one hand, and from the money-lender upon the other, and prosperity will be restored.

Can this he done? Certainly it can be done.

Has it not been done already by several Continental nations? Germany took sixty million acres from the nobles, and apportioned it out amongst her serfs, compensating the former.

If nations are to prosper, a mighty revolution in land administration must be brought about.

Industries or no industries, protection or no protection, no permanent prosperity will ever be accomplished until the people Become bona fide cultivators of the soil, and until that soil is brought down to such a price as will reward its cultivation.

And how much happier and beneficial such a life would be than one spent in the drudgery of manufacturing industries.

The latter are no doubt necessary, but a necessary evil. What have they done for England? Crowded 60 per cent, of her Emulation into the towns, assisting in the creation of wealth, no doubt; but at what a cost? At the cost of millions of joyless, rainless lives; dwarfed men and women, blighted children, and a large residuum of paupers!

Yes, Great Britain can boast, perhaps, of more industries than any other nation, but she also can show a larger list of destitute people.

Taking all other nations and striking an average of their paupers, Great Britain can exceed it by half a million souls.

We are told that to encourage local industry is to give employment to our male adults, who now, unfortunately, are compelled to walk the streets.

Let me tell you this: that in this Colony there are at present employed in her industries 5000 women, 5000 girls, and 11,000 boys! What more encouragement do they seek? Is it to the in more women and children to their wheel?

If the manufacturer is so anxious to provide employment, let him dismiss the girls and boys and take on the men. And will it be believed that, in addition to employing children, we like-wise employ, to the detriment of our colonists, over 4000 Chinese!

These facts need no comment; they speak for themselves; but they indicate unmistakably the hollowness of the cry, Encourage local industry for the benefit of the unemployed.

And, finally, let me say that from what has already been written, it may be concluded—
1st.That our Customs duty should be gradually decreased instead of increased.page 16
2nd.That some machinery should be devised whereby it should be rendered impossible for exorbitant rents to be charged either in town or country.
3rd.The present bona fide cultivators of the soil should be liberated from the grip of the money-lender.

And, lastly, land should be treated altogether apart from other property, and dealt with upon its merits, the value of its unearned increment being made a basis for its taxation, and by land I mean all land, whether town or country.

". . . Let the axe
Strike at the root, the poison tree will fall;
And in its place a garden shall arise
In loveliness surpassing fabled Eden."

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Printed at the Evening Post Office, Willis Street.

* In addition to Customs and other taxes, amounting in all to about 5s. a week.