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The Pamphlet Collection of Sir Robert Stout: Volume 69

Compensation: A Memorandum on the question whether it is due to the Publican on the refusal to renew his License

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Auckland Wilsons and Horton, General Printers Queen and Wyndham Streets.

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Memorandum on the Question of Compensation to Publicans.

The power to grant or renew licenses for the sale of intoxicating liquors has, ever since the foundation of the Colony, been invested, first in the ordinary Justices of the Peace, then in Boards nominated by the Government, and latterly in Committees elected annually (now triennially), by the ratepayers of every licensing district, into which the whole Colony is divided by the Central Government.

The colonial law has never recognized any right to compensation for refusal to renew licenses, and from time to time a considerable number of renewals have been refused, on the simple ground that they were in excess of the requirements of the district. In none of these cases has any compensation been paid or even asked for. For more than 50 years, the public mind has been familiar with the fact that the law provided no compensation for the refusal to renew publicans' or any other licenses.

When the existing Licensing Act was passed in 1881, creating the elected Licensing Committees, it was expected that a very great reduction in the number of licenses would take place. After nine years it has become evident that the Licensing Committees considered that, in conformity with their name, they are created only to license, and at all events not materially to suppress the excessive number of existing houses. Outside influences no doubt also operated to prevent them taking any decided action in that direction. In the course of nine years, out of 1,500 licenses, they have only refused to renew 25 to 30, on the simple ground that they were in excess of the wants of the people, and about as many more on the grounds of misconduct, or for other reasons; while they have added a considerable number of new licenses.

In the session of 1889 a resolution was carried in the House of Representatives by a majority of 36 to 26, in the following form: "Whereas the enormous direct expenditure on intoxicating liquors in this Colony—amounting annually to more than two millions sterling—contributes largely to the existing depression, adds materially to crime and poverty, and reduces the capital available for reproductive industries; and whereas the people under the existing law are powerless to remove the principal cause of these evils, it is, in the opinion of this House, imperative that the Government should, without delay, introduce a Bill giving power to the people, page 3 by direct vote at the ballot box, periodically taken, to prohibit the sale of such liquors within the district in which they reside." The Government accepted this resolution, and undertook to bring in a Bill to give it effect. This it did in the subsequent Session of 1890, which was generally accepted by the Temperance party, in and out of the House; but owing to the pressure of other business, the Bill did not reach its second reading, but with many others fell through without discussion. It is presumed that during the next Session it will again be introduced, and there is reason to believe that it will receive general approval.

The above resolution, and the Bill introduced in furtherance of it, contain no reference to the payment of compensation to the publican or any one else, in the case of the refusal to renew any license. It is, however, by no means improbable that interested parties may raise the question when the Bill comes on for discussion. The object of the present memorandum is to shew that, whether tested by reason or by the experience of Great Britain and Ireland, of the other British Colonies (with one exception), or the United States of America, there is no precedent, and no reason whatever why compensation should be paid to anybody for the refusal to renew a license, which on the face of it shews that it was granted only for one year, and which on the expiration of that term is in law and in fact absolutely null and void. It is proposed to examine such pleas as have been urged in behalf of compensation.

Plea in Behalf of Compensation.

It is contended by the friends of the liquor traffic, that whenever the Government, for the good of the State, takes from a man something which legally belongs to him, it is bound by custom, if not by law, to pay him the value of the thing taken. As a rule this is true; but it only applies to cases where the Thing Taken does Belong to the man from whom it is taken. If the State, having granted to a man a license to sell alcoholic drinks during a specified year, were to put an end to his license before the year was over, no doubt it would be just and equitable that he should be compensated for the loss of his business for the unexpired months of the year. But if after the year had expired, and his license had run out by lapse of the time for which it was granted, the State refused to grant him Another license for Another year, what claim would he have to compensation? The State has taken nothing from him. He would have no more right to a new license than any member of the community who had never had one. On the day when his license expired it was irretrievably gone. The State did not take it away from him; the State simply did nothing, but left him in the position in which he and all other unlicensed persons stand, that is—prohibited by law from selling intoxicating liquors without being licensed to do so.

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That such is the position of the publican when his license expires has been decided many times quite recently in the highest Courts by the best Judges in Great Britain. Judge Field, of the Court of Queen's Bench, in the case of Sharpe v. Wakefield, in 1882, said, "The Legislature recognises no vested right at all in any holder of a License." Baron Pollock says, "The notion that there is a property in the landlord as licensee, cannot be considered law." Chief Justice Coleridge and several other Judges have emphatically said the same. In New Zealand, numerous decisions, involving the same point, have been given by Judges Richmond and Williams, and the late Judges Johnston and Gillies, of the Supreme Court. But, perhaps the point has been put the most clearly of all by Mr. Nash, Q.C. and Standing Law Adviser of the Licensed Victuallers' Society in England. He wrote thus, in 1883: "I am sorry to say, having looked into the question exhaustively, that there cannot be the smallest doubt, that no such thing as a vested interest exists, and that the magistrates can refuse to renew the license of the largest, most useful, and best conducted hotel In England. I dare say that this will stagger many owners, but it is high time that they recognised their position. The mere tern: vested interest infuriates every court of law from the Queen's Bench downwards."

As a matter of fact, every year, for centuries past, the Licensing Justices have refused renewals of licenses in England, Scotland and Ireland, very often on no other ground than that they were not required for the good of the place where they were. In one town alone (Newcastle-on-Tyne) about 100 renewals were refused in about seven years, and similarly in other cases. Innumerable licensed beer shops have also been suppressed. But in no case has any compensation been either granted or asked for. The same has been done to a considerable extent in New Zealand under the existing Licensing Law. Why, when a power of that sort already exists, and has always existed, should a change be made, and a new vested interest be created in the publican's favour, merely because it is proposed to transfer the power now entrusted to the elected Licensing Committees, into the hands of the people themselves at the ballot box? Why should a mere change in the machinery make a fundamental change in the relations between the State and the licensed victualler? Why should he be allowed the opportunity of slipping in at such a chink as this a substantial claim to enormous grants of money, the right to which the existing law entirely ignores?

"An Understanding."

But, though the legal right to sell absolutely ceases at the end of the year, it is contended that the publican has a sort of "equitable" right to a renewal, whatever that may mean. It is said there has always been an "understanding" that so long as the licensee conducted his house properly, if he was refused a renewal he had an page 5 "equitable" right to compensation. We are not told, however, how an "equitable" right can be based on an "understanding" directly in conflict with an Act of Parliament and the printed terms of the license. Who was the other party to the "understanding?" There must be at least two parties. Was it the people for whose protection the duration of the license was limited? When were the people consulted? It may be said that the elected Licensing Committee represented the people. But what power had it to have "understandings?" Its own tenure of office was only for a single year. How could it bind its successors or vest by an "understanding" in the publican a right of perpetual renewal or of compensation at the hands of the people? Nothing can be clearer from the cases above quoted than that there never has been any "understanding" or any customs entitling the publican to renewals, either in theory or in practice. No Licensed Victualler has ever, in the United Kingdom or in New Zealand, been paid a shilling for the non-renewal of his license on any grounds whatever, though hundreds of cases of such non-renewals have occurred.

Another Plea.

A more plausible plea, however, is that Committees have in some cases compelled applicants for licenses to erect palatial houses, and that they are therefore entitled to perpetual renewals, or compensation if at any future period a renewal is refused. As far as can be ascertained no such cases have ever occurred. Committees may, in many cases have refused to grant or renew licenses on the ground that the house did not provide the accommodation required by the 38th section of the Act. Knowing this, applicants for licenses may consequently have gone before Committees with elaborate designs for palatial houses and asked if those would satisfy the Committee. Of course they would, as they were far beyond what the section referred to directed the Committee to insist on. But in such cases the Committee did not require the magnificient structure to be erected; all that they could, or it is believed ever did, require was that the accommodation prescribed by the Act should be provided. Beyond that the Committee had no power to require anything, and probably never did so. If the house did not provide that, the Committee had no power to grant a License at all; but if the applicant (not in reality being the intended publican, but some wealthy brewer or other capitalist), chose to go beyond the laws' requirements and build a palace, with the view of making it attractive, doing a big business and getting a large profit, knowing all the time that the license was only a yearly one, he certainly did it solely at his own risk. If, however, there ever was any such "understanding" as the liquor traffic claims, let the compensation be paid by the members of the Committee who were parties to it. The people have certainly a right to protest against being saddled with the consequences of the act of the Committee.

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In what other Cases has Compensation been Given?

But against these plain common-sense arguments, the liquor trafficker sets the fact that in a number of what he calls parallel cases compensation has been given by the State to the person deprived of some privilege or advantage previously enjoyed under State sanction. Such cases as the disestablishment of the Protestant State Church of Ireland, when the clergy, whose livings were taken from them, received compensation for their loss. Officers in the army also, who had, according to a well-established custom, purchased their commissions, were compensated when the system was abolished. So, also, when the owner of tolls or markets, bridges or ferries, was by law deprived of his right to charge, then he, in many cases, was compensated. And finally, the slaveholder, when slavery was abolished, was awarded twenty millions for the loss of his property in human flesh. But the answer to these cases is that in every one of them the party compensated did lose something that had been his; he had either a life, a freehold, an hereditary or perpetual interest. The State took this from them. In the liquor trafficker's case, his interest is only for a single year, and when that has expired he has nothing more, not even, as the law has repeatedly decided, so much as a right of renewal for another single year. When the renewal is refused, the State takes nothing from the previous licensee; why should it compensate him?

Compensation Paid on Abolition of Slavery.

The chief of these precedents relied upon is that of the twenty millions paid to the slaveowner. A moment's consideration will show that it has no analogy whatever to the case of the licensed victualler. The slaveholder held his slave, not for a year only, but in perpetuity; the slave was his to live or die, his wife was his, the children and remotest progeny were his; he could work him without wages; he could rend asunder the domestic relations of husband and wife, father and child; the slave was his as utterly as were his ox, or his ass, or anything else that was his; in life he could sell him, and, on his own death, he could bequeath him to whom he pleased. Emancipation actually took away altogether, and for ever, the owner's property, guaranteed to him by laws which had been in force for some hundreds of years. What analogy is there, between his case and that of the publican, from whom nothing is taken away, not even an imaginary vested interest in a year's renewal?

It has been the fashion to boast of this compensation given to the slaveowner, as a noble and liberal act; but if it was really due, where was the nobility or liberality in giving it? In my opinion the giving it was a weak, and even a wicked thing. For nearly 300 years the negro had been robbed of his liberty, worked without pay, reduced to the condition of a beast; all this being made clear, the conscience of the nation decreed his emancipation; but before he was freed the man who had inflicted all the horrors of page 7 slavery upon him, must be paid to let go his clutch! So wrong-headed John Bull paid him twenty million pounds, and has never done boasting of it since. What he ought to have done was to have paid to the emancipated slave, turned naked into the world, the compensation which he mistakingly bestowed on the man who had wronged him. And now we are asked to repeat the same folly and injustice; the liquor trafficker has inflicted, and still inflicts on the world, evils immeasurably greater than the slave ever suffered; he has for long weary years filled our gaols, lunatic asylums, and refuges with his victims, crowded our streets with the most pitiful forms of vice, blasted the prospects of the heathen nations by doging, with his poison, the footsteps of the missionary, and now, when the community says all this must cease, he says "yes, but not till I am compensated!"

Balance the Account.

But if he must be compensated, why treat the matter differently from any other business transaction? Every account current has its two sides, its Debtor and Creditor. Would any trader think of paying the one without balancing it by the other? Suppose it were decided to give the publican ten years' goodwill of his business when the renewal of his license was refused. Set off against this all the evil he has inflicted on society during the previous ten years. Let the widow, the orphan, the criminal, the lunatic, the street-walker, and his other customers send in their accounts for that period. Let him also refund the cost of all the institutions which the State has had to maintain in its dealings with these classes. Then he will be in a position to ask for whatever compensation may be thought due to him for the non-renewal of an expired yearly license.

Other Cases in which Compensation Refused.

Before leaving this part of the case, it should be observed that in the United Kingdom numerous instances have occurred in which the State has refused to grant compensation. For instance, only thirty-five years before it abolished slavery it abolished the slave trade, in which large amounts had been invested by the commercial and shipping classes of England and Scotland. The great London, Bristol, and Glasgow merchants, who were deeply engaged in it and made great profits by it, put up their cry in Parliament for compensation, estimating the amount of their losses at one hundred millions. The Prime Minister, William Pitt, refused it, and not a shilling was ever paid. But in a great number of other cases directly affecting the liquor traffic there is a long list of precedents where the traffic was restricted, or dealt with in ways which largely reduced its profits; yet no compensation was ever given. Some of these go back as far as the time of Edward III. (1327), Henry VII. (1495), and Edward VI. (1552). More recently in 1757, a time of famine in Ireland, all distilleries were prohibited; and again in 1796, 1809, and 1814. In 1853, the Scotch Sunday Closing Bill was passed, when the sale of spirits page 8 immediately fell off by 1,250,000 gallons. In 1878, the Irish Sunday Closing Act took from the publicans the best day of the week, equal to all the other six, when the trade tried, but unsuccessfully, to get a compensation clause inserted. In 1860, Mr. Gladstone's Wine Bill was passed, avowedly with the intention of lessening the publichouse trade. In 1869, Sir Selwyn Ibbetson's Act closed a large number of beer shops—in Liverpool alone, 300. In 1872, Lord Aberdare's Bill reduced the hours of sale in publichouses by 24 in every week. In 1877, Lord Meldon's Act closed 557 houses in Dublin. In 1887, the Irish Sunday Closing Bill, a compensation clause was deliberately rejected in Parliament. In 1881, the Welsh Sunday Closing Bill, and, in 1882, the Scotch Steamboat Sunday Closing Bill were passed; and in 1883 came the prohibition of the use of publichouses as election committee rooms, and another prohibiting the payment of wages in publichouses. In not one of these cases, though all largely affected the profits of the traffic, was compensation granted. They certainly altogether outbalance the weight of authority attributed to the payment made to the slaveholders.

What is Thought of Compensation in the United Kingdom at this Day?

The Tory Government, which was placed in power, and is kept there, very largely by the votes and influence of the liquor traffic, when it proposed, two years ago, to transfer the Licensing power from the Justices of the Peace to the County Councils, also proposed to give compensation to publicans whose licenses might be refused by those bodies. A deep and widespread burst of indignation, from one end to the other of the Kingdom, compelled them to abandon the attempt. During last session of Parliament, however, it was renewed in a very adroit way, by making it part of a financial measure, which had no other connexion with the liquor traffic, and which was otherwise approved by all the parties in the Legislature. But the country again rose almost as one man, and notwithstanding all that the friends of the traffic could do, the Government had, at the last moment, to drop the obnoxious clauses. It is believed that no Government will again dare to make the attempt.

What is Thought of Compensation in the United States, the British Colonies, and Elsewhere.

Numerous States of the Union have passed prohibitory laws, in some cases absolutely, as in Maine, Kansas, and Iowa; in others by local option, as in Massachusetts, Michigan, parts of Pennsylvania, and others. In Canada absolute prohibition is in force in the Great Western Territory, and local option in the rest of the Dominion, under which a large number of counties and cities have put down the sale of intoxicants. Now, in not one of these has the right to compensation been granted, and the traffic has not even dared to ask for it. In the Australasian Colonies, Queensland page 9 has enacted local option, without compensation. In New South Wales an active agitation for local option is in progress, the promoters of which are emphatically against compensation. In New Zealand, after many years' legislation, local option has been given, the Licensing Committees having power, entirely or partially as they choose, to suppress the traffic, without compensation, a power that has frequently been exercised. In Victoria only has compensation been granted, and there an attempt is being made to pay it out of an extra license fee imposed on the surviving licensees; but it is not a success, and a strong feeling is growing against compensation. The small independent kingdom of Rarotonga, in the Hervey Group, Southern Pacific, made prohibition a part of its original Constitution, and has never had a licensing system at all, consequently has no provision for compensating anybody, and certainly will not give it to the infamous smugglers from New Zealand, who, as their Queen complains, are surreptitiously introducing intoxicants into the islands, a practice against which she appeals to the Government and the Temperance reformers of this Colony.

Force of Above Statement.

The weight of the above facts consists in this, that large and important sections of the same race as ourselves, speaking the same language, acting on the same moral principles, holding the same religious faith, and having up to a recent date held the same relation to the liquor traffic as we do, have deliberately asserted the moral and constitutional right of the people, by a majority of I votes, to suppress the liquor traffic. In only one single instance has the right of compensation been recognised, and in only one single case has the interest, supposed to be injured, had the audacity to make a claim to it. Is our moral sensibility so much more powerful than that of the countries mentioned, that we must demand that the people shall pay several millions of pounds to the liquor traffic before they shall be allowed to suppress it, and to withdraw; the gratuitous monopoly with which they have so long endowed it?

If Compensation Granted, by Whom, and to Whom to be Paid.

But if after deliberate consideration it should be decided that compensation must in equity and good conscience be paid to somebody, three questions arise:—(i) To whom, and (2) by whom is it to be paid? (3) Where is it to stop?
a.To the first of these questions the usual answer would be, "the publican." But if we are correct in stating that he is at best only the temporary holder of a license, which has already expired before his claim arises; that he has no shadow of a right to a renewal in any court of law or equity; that in 80 cases out of 100 he is not the owner of the house, nor even of the furniture in it, but only an annual tenant from some brewer or other capitalist who really owns it and all that is in it, the tenant included; it is by no means evident that the publican is the man to recover the compensation.page 10
b.Is it then the owner of the house, the brewer, wine and spirit importer, or other capitalist? It is not easy to see where his claim comes in. It is not his name that is in the license, nor over the door; it is not he that is watched by the police or punished by the magistrate for breaches of the law; he has never been heard of in the transaction; there is no "privity," as the lawyers say, between him and the State. In fact we know nothing of this gentleman who moves in the higher spheres. What claim can he have? If he built the house and got its value doubled or trebled by his tenant having a license, does that give him a claim to compensation, when it is reduced to its cost value by his tenant's loss. He knows well enough the risk he runs when he builds the house. In the first place he knows his tenant may never get a license for it. In the second place he knows that as the law stands the tenant's license may at any time be forfeited for the tenant's misconduct, or he may fail to get a renewal at the pleasure of the Committee. He runs these risks for the sake of the large probable profits, and, like all gamblers, must bear the loss if he take the winnings. It was a mere speculation. The law has not been silent, but has given the same warning to him for years, at least since 1873.
c.But another question must be asked: If you begin to compensate where are you going to stop? If the brewer and publican are to be compensated, why not the barman, the barmaid, and all others who get a livelihood, often the only one they are fit to get, by the publichouse? The pawnbroker might put in his claim, for it is certain that if the publichouse were closed, his business would be gone. Half the police force might be discharged. The empty gaols, lunatic asylums, and hospitals, and pauper refuges, and reformatories would no longer require warders, nurses, or keepers. You would have all these on your hands. Nay, the poor wretched nightbirds, who shun the streets by day, and swarm in them under the flickering gas lamps, would cry out for compensation, for their miserable trade could not be carried on (so they tell us themselves) without the publichouse and its surroundings.

But, Lastly, by Whom is Compensation to be Paid?

Is it to come out of consolidated revenue, or by loan, or how? If not the Central Government, is it the ratepayers of the district in which the houses are suppressed? This simply means that no houses shall be suppressed, for we know how eagerly the County Councils stick to the licensing fees, which, most injudiciously, have been handed to them. Is it likely that they will not only page 11 give up the licensing fees, but tax themselves heavily to pay compensation to the publican and brewer? The Victorian method of paying it out of increased licensing fees has not proved itself a success, and in that Colony they have not undertaken the annihilation of the traffic, but only a moderate reduction of the number of existing houses to what is called statutory limits, what in most countries would be called an excessive number.


The above is a summary of the principal arguments on this subject, bringing it down to the present date. The late Rev. J. Edgar, of Auckland, and Mr. Jago, of Dunedin, both ably discussed it some years ago in pamphlets, but I believe both are out of print and rather out of date. Mr. Joseph Malins, Chief Templar of England, wrote an admirable and exhaustive paper on the subject, which was read at the Convention of the National Association in London in 1885, but it is also a little behind the present time, and has not any special bearing on this Colony or its past history on the subject. In the preparation of this memo. I have been much indebted to it. Mr. Malins' paper is the most forcible and copious argument hitherto published on the subject, and copies have been forwarded to the New Zealand Assembly library. The current information on the subject will be found in the United Kingdom Alliance News (the organ of the Local Option party in Great Britain) obtainable in London at a penny per number.

William Fox.

Since the publication of the above, the Judicial Committee of the House of Lords has decided (on 20th March, 1891) that the licensed victualler has no vested interest in his license, and that what are called renewals are really new licenses every year, and may be refused, at the discretion of the Licensing Justices, without any reason assigned or compensation paid.

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The National Education Bill of the Colony is about £400,000 a year. The National Drink Bill is yearly £2,000,000. We spend, therefore, nearly five times the amount on beer that we spend on brains—yet there is an outcry as against the cost of Education.

The adult male and female population amounts to about 280,400. If every adult would give the cost of a quarter of a glass of beer a day it would cover the whole cost of National Education, and nearly half as much more!

In the Gaols, Lunatic Asylums, Refuges, Reformatories, Hospitals, and other institutions, mainly supported by the taxpayer, there is a floating population of between 2,000 and 3,000 persons of both sex. Most of them have got where they are through drink!

The total consumption of intoxicating drinks per annum in the Colony amounts to £3 4s. per head—men, women, youths, girls, and sucking babies. You ask what have "babies" to do with strong drink? In the Children's Hospital in England hundreds die from hob-nailed liver—the last development of alcoholic disease in a confirmed drunkard. Thousands more, no doubt, die of it outside the hospitals. Of course, in these cases, it is the result of drinking in the parents.

The enormous evils which flow from intoxicating drink surpass those inflicted on the world by war, pestilence, and famine combined. [W. E. Gladstone quoting Charles Buxton, the great British brewer]. The experience of centuries has proved that there is no remedy for this evil, as for most others, except the removal of the cause. Enact and enforce prohibition by the will of the people, or absolutely as is being done in many countries, and in a few years all these evils will disappear. There is no other method. Education, moderation, and even religious teaching are all powerless as a National remedy in the presence of the Licensed Liquor Trade.

Wilsons and Horton, Primers, Auckland.