[unclear: Economic Fatalism]
for that reason accumulated in fewer hands? To say that would be to neglect the great extension of Joint Stock Company and to ignore the lesson of the Liberator crash.1 But the important thing to recognize is not so much that the tendencies in any given society may be too various to be comprehended in any one formula, as that the tendencies themselves may be altered by human wills. I am inclined to think that we have got into a way of spelling tendency with too big a T, and man with too small an M. If four or five really accomplished swindlers were to decamp with four or five big municipal balances, I suspect that the tendency towards the municipal extension of industry might receive a check from which it would take half a century to recover.2 If one great statesman with the pushing power of Mr. Rhodes and the intelligence of Mr. Balfour were to set to work to read the Report of the Gold and Silver Commission of 1888, and then were to preach Professor Marshall's gospel of symmetallism to the bankers of England (and the congregation would be a small one), they would soon enough persuade the British public of the merits of a scientific international currency. Bagehot told us long ago that the English people was a deferential people. That is one of the little national tendencies which favour the Hero and the Swindler, who are both of them important and incalculable forces in economics and politics, as a recent laborious but uninspired work upon France sufficiently testifies. In any case the cause gains nothing by its fatalistic appendages. Let us travel not whither an assumed historical tendency, but rather, as Plato says, "whithersoever, the argument may lead."
Herbert A. L. Fisher.
Democracy in New Zealand.
In looking back, as an old New Zealander, at the political developments in the colony during the past ten years, the feature of the situation that seems to impress itself most vividly on the mind is the contrast between the anticipations then entertained with regard to the new policy, alike by its partisans and by its opponents, and the present outcome in actual fact In the expectation, on the one hand, not only of the landowners, but also of a great part of the business community then, the wealthier classes in a body were about to be handed over, bound hand and foot, to the "have-nots," to be despoiled at pleasure; property was about to become as insecure as it is in any of the most turbulent of South American republics, and capital was about to seek safety by flight en masse from so inhospitable a region. Yet, of course, none of all this, nor anything approaching to it, has happened. New Zealand is, perhaps, now as steadily prosperous as any part of Her Majesty's dominions; and the average business man or sheep-farmer there will probably now tell you that it does not seem to make much difference, in the long run, what political party is in power at Wellington.
On the other hand, the devotees of the new policy cannot look back, I should think, on the history of the ten years during which their chosen leaders have guided the fortunes of the community without a feeling of disillusionment. It will take them, probably, something of an effort to recall their own mental attitude in the early nineties. The House of Representatives met the country in 1891, under the leadership of a gentleman who was an avowed and enthusiastic disciple of the late Henry George. The gospel of Land Nationalization was continually on his lips, and on those of many of his followers. What single; practical step can they point to which has been achieved, even page 299 remotely, in the direction of realizing it? The party, moreover, were possessed with the idea that they were about to convert New Zealand into a country where the problems of poverty and unemployment were to be definitely and triumphantly solved. Such evils were due, they held, to the rule of the propertied classes, whose interests were bound up with the much-denounced competitive system. Now that power was transferred to the representatives of the mass of the population, why, they asked themselves, should such blots on our modern civilization be allowed any longer to remain? They were determined that, at any rate as far as New Zealand was concerned, they should be at once and for ever wiped out; and they entertained no doubt as to the power of their Parliament to wipe them out. Under the new régime New Zealand was to become a country where "unemployment" should no longer be heard of, but, on the contrary, where abundance of fairly paid work would be provided for every one who was willing to accept it. So completely were they carried away by their faith in the proximate advent of their millennium, that they began even to be ambitious of making New Zealand their point d'appui in the world for effecting the elevation of the human race generally. Members of the popular party in the New Zealand House, who found themselves in Australia, proclaimed to meetings of trade councils there the steps that were being taken in their own colony to do away with capitalism and competition, and to provide the fair living wage, not only for all the working men of New Zealand, but for all elsewhere who sought the hospitality of its shores; and their irresponsible oratory was further endorsed by an official communication from the Minister of Public Works in Wellington. The New Zealand working classes have had many ups and downs since that day. Things are beginning, I believe, to look somewhat brighter with them now than they were a few years ago. In 1895, when I left the colony, so far was it from being the case that an industrial millennium had then been brought about, that wages were lower than they had been for, at any rate, thirty years previous, and work of every sort was, at the same time, more difficult to obtain. Some two page 300 thousand persons, no doubt, who were employed on Government roads and railways were receiving better wages than their efficiency might have warranted; as for the remainder of the working classes, the times they were passing through were hard, and the Government was neither doing anything nor attempting to do anything to mitigate their hardness.
It is not very easy, I think, for an observer, who has been accustomed to watch the course of English politics only, to realize fully the character of the political situation in New Zealand, say in 1891. One would have to picture to himself a House of Commons in which the recognized leaders of both our present parties had either not attempted to obtain seats, or, having attempted, had failed in obtaining them; and in which the administration of affairs was handed over to a Cabinet consisting of men whose shibboleths and whose ideals were those of Messrs. Tillett and Keir Hardie. If we conceive such a Cabinet, with an obedient and even enthusiastic majority at their back, we have some conception of the sort of Cabinets that ruled in New Zealand in the Parliaments of 1891 and 1894. The question, then, how it was that so little came of it all, is surely one that at least presents an interesting study in the psychology of nations. On the one hand, the fact seems to indicate that, in English-speaking communities, property and the established order of things have leas to fear from even the most complete triumph of a popular party than we are ordinarily inclined to anticipate. On the other hand, to those who entertain unbounded expectations as to the power of the State to remedy human ills, and to effect such revolutions in human affairs as would be involved in the nationalization of the land, or in doing away with or in modifying in any important respect the competitive and capitalistic systems, its lesson appears to be, that when all visible opposition has been conquered, the battle, instead of being won, has hardly commenced. When the task of transmuting theories into practical measures is once set about, it seems that impalpable, but, at the same time, insuperable obstacles present themselves, and, in one way or another, further progress in the collectivist direction comes to a stand still, rather page 301 from the lack of inherent motive power than owing to any opposition with which the champions of Socialism can do battle.
A striking instance of the contrast between anticipation and event, between proposals and performance, is to be found in the history of the New Zealand Government's dealings with the land question. The land question, indeed, it must be said, is that on which more than on any other Australasian politics have always hinged. Thirty years ago, the guidance of affairs in New Zealand was pretty completely in the hands of the class that might be called its aristocracy. Wealth and position were almost as necessary then for the attainment of a seat in the local Parliament there, as they are in the Parliament of England to-day. The contrast was frequently drawn between the New Zealand House and the legislatures of the other Australasian colonies. New Zealanders piqued themselves on the superiority, in presence and in demeanour, which their legislative assembly presented when compared with that which sat in Melbourne or in Sydney. It is not impossible that wealth and position would have preserved to this day their natural leadership, had it not been the case that, among the duties of the legislatures, provincial and general, was that of disposing of the waste lands of the Crown. It was, perhaps, inevitable that, if these Crown lands were to be disposed of at all, they should pass largely into the hands of the legislators and their friends, for the simple reason that that class comprised the bulk of those who had money to invest; and it was, perhaps, also inevitable that the land laws should, during their régime, have been so framed and administered as to facilitate their passing into their hands at prices which seemed fairly satisfactory to themselves. The time, however, came, and, in many instances, seemed to come very suddenly, when these fairly satisfactory prices appeared, as compared with existing prices, to be preposterously insignificant. Properties, it might be thirty thousand acres in extent, were seen to be changing hands at £2 per acre that had been bought, only a year or two previously, from the provincial authorities for 5s. per acre; and the sentiment gained ground that the New page 302 Zealand public had been defrauded wholesale by those in whom they had reposed their trust. In this condition of the public mind on the land question we have the key to the New Zealand revolution. It had its Philippe Egalité in Sir George Grey. The spoliation of the public estate by the squatters was the ceaseless theme of his eloquence when he entered on his career as a politician in the seventies. Their influence in the State never recovered from the blows he then dealt them.
The main aim of the revolution was to redress this wrong, to some extent real and to some extent imaginary. When Mr. Henry George's book appeared, it chimed in with the public sentiment. Land Nationalization was in the air, and, at any rate as regards its preliminary stage, the expropriation of the holders of large estates, it seldom failed to find favour at the hustings. In 1894 the expropriation proposals got the length of being put into the shape of a Government Bill that was laid before the House of Representatives. As a Bill it would have been drastic enough for a Ledru Rollin or a Louis Blanc. It proposed to give the Minister of Lands power to enter on any estate he pleased, and to take any part of it he chose at his own price. Had it been put through and administered in the shape and in the spirit in which it was proposed, not only would no freehold have been safe, but no mortgage would have been worth the paper it was written on. As the Government had a following of about fifty in a House of about seventy, the outlook was serious. In the face of the fact, indeed, that such a proposal got the length of being embodied in a Government measure, it cannot be held that the fears entertained for the security of property were altogether idle and groundless. It soon appeared, however, that, in running the gauntlet of the House itself—Government supporters though the great majority were—the Bill had an ordeal to pass that was by no means child's play. One amendment after another had to be accepted by the Minister in charge, and as the Bill emerged from Committee, before even it reached the Upper House, it had been transformed into something comparatively innocuous. In the first place, an amendment had been accepted to the effect that, if any part of an estate were page 303 taken, the whole, at the owner's option, must be taken also. This did away with the possibility of the eyes being picked out of estates, and the comparatively worthless balance being left on the owners' hands. In the second place, instead of the Minister being in a position to buy at his own price, an assessment board, so constituted as to be independent of political influence, was appointed, by which, in the last event, the price would be determined. In the practical working of the Act, the opponents of the Government have had occasion to criticize them rather for having used it to purchase the properties of their friends and allies at fancy prices, than for having used it to terrorize capital or to harass political antagonists.
So much for the expropriation aspect of the Land Nationalization scheme. For a Government, however, that possessed some millions of acres of waste lands suitable for settlement, there was still considerable scope for bringing into operation the principles of Land Nationalization, even without any expropriation of private owners. Mr. Henry George, as a matter of fact, under some misconception or misinformation, refers to the "Ballance Act" in New Zealand as one which does, to some extent, put into practice his theories. The principle, indeed, of so disposing of the waste lands of the Crown that, in the future, the State should, to a large extent at any rate, profit by the "unearned increment," is one for which in itself there is a great deal to be said. It is not one, however, that finds itself to-day embodied in the New Zealand statutes. Mr. Ballance's Land Bill, as brought down, no doubt provided for a system of "perpetual leases," with periodical resettlements, as in India. By the time that it became law, however, the provision for resettlements was eliminated, and the holder of a "perpetual lease" in New Zealand is now as secure of his "unearned increment" as is the holder of a Scotch feu. In the case of the Village Settlement lands—small blocks on which the Government proposed to locate the unemployed, granting them at the same time loans for the erection of their houses and fencing,—a clause, in the statute dealing with the matter, providing for resettlements was, in the first instance, actually in force. The village settlers, however, page 304 agitated against it, urging, no doubt with some force, that the poor man ought to have his land granted to him on terms at least as favourable as those on which his richer neighbours held theirs. It was to no one's interest to contest their claim, so the Government made little difficulty about giving way, and the village settler's allotment now is practically freehold.
In what we think of as State Socialism, there appear to be two distinct principles involved; and, curiously enough, we find them here operating in direct antagonism to each other. On the one hand, there is the principle of subordinating the interests of the individual to the interests of the community; on the other hand, there is the principle of doing away with the existing system of competitive rewards, and of remunerating the individual in accordance with his needs, rather than in accordance with his capacity. In regard to the first—the subordination of individual to State interests—the history of New Zealand politics goes to indicate that, in the Anglo-Saxon world at any rate, a victorious democracy, instead of being likely to push it to undesirable lengths, is much more likely unduly to ignore it. It is a paternal Government, like that of India, that can be trusted to pay an adequate degree of regard to State interests when they come into collision with those of classes or individuals. The ultimate depositary of power in New Zealand is now the peasant farmer and his wife, and it appears impossible to them to realize to themselves the idea of the State as an entity which has any urgent claims upon them; while, on the other hand, the troubles and the merits of the poor and the pioneer settler appeal readily to their sympathies. If it can be pointed out that his troubles can be diminished at the expense of the land revenue without any special class or individual suffering injury, the claims of the State seem to go down before such an appeal with very little show of resistance.
The other socialist principle, on the contrary—that of remuneration in accordance with needs—seems to be highly effective for a time at any rate, in moulding the policy of such a victorious democracy. In New Zealand its operation was conspicuous in connection with both the land and the labour questions. In page 305 regard to both, however, limitations and difficulties soon began to make themselves manifest.
We may glance at it, first, in its bearing on the land policy. I will not, however, endeavour to initiate my readers into the mysteries and technicalities of a colonial waste-lands system, but will confine myself to giving a few salient facts that came under my own observation in the district where I resided—the southern part of the North Island. The waste lands that remained to be dealt with in that part of the country in 1890, it should be premised, were all forest lands. The open land had long ago passed into private hands. The manner in which blocks of fresh waste lands were opened up for sale and disposed of by the former Government had the merit, at any rate, of being simple and business-like. An area of, say, 10,000 acres would be fixed on, and would then be divided up into sections, varying in size probably from 100 to 500 acres. Roads would be laid out through the block, and the main roads would be constructed. A day would then be notified on which the sections would be disposed of by auction, and then those who were prepared to give most for the land would get it. It happened, of course, in some instances—no doubt, indeed, in many—that a sale of the sort would take place when wool was high in price, or when a large amount of loan money was being expended, and when land values, in consequence, were booming. Subsequently, when the reaction came, many of the settlers would be found inevitably to have paid too much for their blocks, and to have landed themselves in difficulties. To the initiators of the new policy, such a consummation as this was altogether abhorrent. Their first step, accordingly, was to do away with all sales by auction of waste lands. The system which was largely substituted for it was what was called the "special settlement" system. Under it, it was open to the intending settlers to form themselves into associations, with ordinarily 100 members in each, and, when thus associated, to take the initiative themselves with regard to the land that they proposed to settle. They would apply for a block, perhaps, of 10,000 acres, to be divided into 100 sections of 100 acres each. These sections would all bear a uniform price, page 306 and always a very moderate one, never above £1 per acre, to be paid up in instalments extending over a considerable number of years. It will be obvious at a glance that, in a 10,000-acre block, some of the 100-acre sections would probably be worth ten times as much as others. How, then, were they to be apportioned? The apportionment of the sections was left to the members of the associations themselves to carry out, and their ordinary method was to put the numbers in a hat and draw for them. I have one particular block—the Tiraumea block—in my eye while writing, but many others were dealt with quite similarly. In the case of the Tiraumea block, the association celebrated the occasion of drawing for the sections by a dinner, at which, though not a member, I had the honour of being present. The drawing, it need hardly be said, was a scene of considerable excitement. After it was over, the fortunate holders of the numbers designating the sections fronting the Manawatu River, and within a few miles of the Woodville railway station, received the good-natured congratulations of their less fortunate fellow-members; and well they might. They had secured, without any sacrifice whatever to themselves, beyond the payment of a half-crown entrance fee, properties salable at a moment's notice for at least a couple of hundred pounds apiece. The right to one of the sections was, as a matter of fact, sold next morning for £225, and the rights to others, shortly after, for even larger sums. If any one did not care to go on paying up the instalments on a back section, he had only to throw it up; but even the worst of them were worth holding on to in any case. It was a lottery in which there were all prizes of more or less value, and practically no blanks. The subsequent history of the block is interesting. The very next day, a speculative gentleman in a neighbouring town had his agent buying up the rights of the intending settlers to ten of the most eligible sections. Within a few months' time he again had sold these rights, at a satisfactory profit to himself, to the settler who now holds them, and who had to pay their full value, about £7 per acre, for them. Other portions of the block were subsequently dealt with similarly. Thus, while page 307 the resources of the State were dissipated in this amazing manner, the ultimate occupiers and users of the land were not in the least benefited.
When it became apparent that to get one's name down as member of a small-farm association might mean, if one had luck, making a hundred or two at a stroke, or perhaps much more if one was prepared to hold on for a few years, there was, as may be imagined, a run on small-farm associations. To succeed, however, in making money by getting into an association which was worth getting into, it soon appeared, required special qualities and special opportunities, just as much as any other way of making money did. The first thing a settlers' association had to do was to choose an eligible block, and that, with forest land, is not so simple a matter as it may seem. The next, was to get it granted by the central authorities. Plainly the local politician, who was a persona grata at Wellington, and who had access, consequently, to the earliest and best information, would present himself inevitably as the man to whose advice and influence all whose aspirations lay in that direction would resort; and the importance of the Radical members and Radical candidates in their several districts was thus at once enhanced a hundred per cent, by the initiation of the new policy,—and this, it must be said, without any thought of a corrupt aim originally on the part of the Government in initiating it. In the part of the country where I resided it would not be going too far to say that the whole resources of the land revenue, or of what ought to have been land revenue, were practically at the disposal of the "Liberals" for electioneering purposes. It seems, indeed, that always when the State adopts the principle of making concessions to one person or class of persons which, in the nature of things, it is impossible to make to all, the issue is, and must be, political corruption in one form or another. There lies the great difficulty and danger that besets the practical application of the principle of payment in accordance with needs, rather than in accordance with capacity; and it forms a difficulty and a danger that, I think, have not been sufficiently adverted to.page 308
There is a party in the London County Council at present who are in favour of the adoption of a policy that will bring such house accommodation as is now worth 6s. per week within the reach of the class that at present pays only 3s. per week for it, by granting the difference out of the rates. The question is: Will they anyhow achieve their object? New Zealand experience seems to give an answer in the negative. In the first instance, no doubt, the artificially cheapened houses might be granted to a favoured section of the poorest class; but we may be certain that they would not long remain in their occupation. A six-shilling-a-week house with a rent of only three shillings a week, and with practical security of tenure, so long as the rent was paid, would soon carry a respectable sum as goodwill. These sums would probably be realized immediately in almost all instances, and those who had realized them would next set about endeavouring to secure another similar house, and to realize the profit similarly. To effect this, they would inevitably look for assistance to the municipal politician who aspired to obtain their votes. The dereliction of business principles in such matters seems calculated inevitably to corrupt both electors and elected. Every future profit has a present value, and, if the State or the municipality once enters on the course of giving away such future profits, it seems that they might just as well enter on the course of giving away their actual cash in hand.
As regards the new labour policy, its tendency to give rise to political corruption was at least as conspicuous as was that of the new land policy. In the construction of Government roads and railways the time-honoured practice of calling for tenders, and giving the work to the man who offered to do it on the terms most profitable to the State, was done away with. That method, it was said, formed part of the old and vicious competitive system, which it was the aim of the new "Liberalism" to abolish. They substituted for it what they called the system of "Co-operative Works." The word "co-operative" appears to have been made use of mainly because it had a pleasant sound to "Liberal" ears, otherwise its page 309 appropriateness is not apparent. The salient features of the new system were that, in the construction of a road or a railway, instead of a few large contracts being let, a large number of small ones were—a change that might or might not be desirable according to circumstances,—and that, further, these contracts, instead of being let to the lowest tenderer, as was usual formerly, were let on terms fixed by the engineer in charge—terms which were intended to be such as would afford a fair living wage to the group of, perhaps, ten or a dozen workmen who took the job. The decision as to what total price for a job would afford a fair living wage, though left, in the first instance, to the local engineer to determine, was subject to review by the authorities in Wellington. Cases were of continual occurrence in which work was allotted at a price at which the labourers alleged that they could not make fair wages. The "Liberal" member or the "Liberal" candidate was, in such a case, of course, again the man to be applied to; and his influence was, in the early days of the new policy at any rate, ordinarily sufficient to get the decision of the engineer overruled, and a higher price given for the work. It was little wonder, in such circumstances, that, when the elections came on, a block vote from the "Co-operative Workers" could, without fail, be depended on by the "Liberal" side. The canvassers, indeed, of the other side knew always, from the first, that it was not worth their while to go near them. They were, as the Leader of the Opposition remarked in the House, "the Praetorian Guard of the Government."
The worst abuses in connection with the system, it must be said, were showing a tendency to work out their own cure before I left the colony. It is significant, however, to notice how and at what cost the remedial agencies were beginning to operate. The original aim of the policy was, as observed above, to solve the problems of poverty and unemployment. It was the practice, accordingly, in the first instance, to send up batches of men, consisting largely of thriftless ne'er-do-wells from Wellington or Christchurch, to the forest districts, and page 310 to set them to work there on the construction of roads. The result was that the settlers found the winter coming upon them with no roads made to their homesteads, and, at the same time, saw the money, that ought to have been sufficient to make them, spent on people who, in many cases, passed most of it on immediately to the neighbouring publican. The Government thus found themselves in danger of seeing the settlers' vote turned against them in a body. They began to perceive that the only way of preventing their "co-operative works" policy from becoming absolutely intolerable to the mass of the thrifty population, was by, somehow or other, securing the performance of work that was fairly well worth the money paid for it, judged by the ordinary standard of wages in the country; and this, while high prices continued to be the rule, could only be effected by confining the employment given to skilled and efficient workmen. The practice of sending up the unemployed from the cities to the forest districts was certainly speedily discontinued, and such road work as there was to be given fell into the hands of the settlers themselves and their sons. The original conception of the policy was thus practically abandoned. It was initiated with the aim of raising the whole level of wages in New Zealand. It was only found possible to make it endurable by taking the existing level as something that was fixed ab extra, and over which the Government had no control, and by accommodating to it, as their standard, the terms of the employment which they were in a position to give.
William Warrand Carlile.
1 It will be interesting in this connection to see what advantage is taken of Mr. Chamberlain's Bill for facilitating the acquisition of house-property by the working-classes.
2 One of the suppressed postulates of Political Economy hitherto has been that society is honest as well as competitive. A monograph upon the economic friction produced by swindles might be extremely valuable.