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The Pamphlet Collection of Sir Robert Stout: Volume 80a

The Political Budget

page break

The Political Budget,

Wellington, July 31st, 1897.

The Political Budget,

It is a feature of Democratic institutions in whatever country they exist that Ministers have to be extremely wary of offending political supporters by undue parsimony. They exercise economy rigidly where savings can be effected by the retirement of officials believed to be opposed to them, and then they find that some other branch requires a chief clerk, an expert, or a private secretary, not from reasons of nepotism, hut because a statesman bent on reform naturally likes to be seconded by officials who agree with him.

It is but charitable to assume that some such motive prompted the following notification in the Gazette of May 27th, page 1102:—

Government Advance to Settlers Office, Wellington,

It is hereby notified for general information that His Excellency the Administrator of the Government in Council has been pleased to appoint

Andrew McKerrow, Esq., of Humpden, and

Albert Barns, Esq., of Wanganui,

to be Valuers for the business of the Government Advances to Settlers Office. Such appointments to date from the 15th May, 1897.

John McKenzie

, Minister of Lands.
Hampden, the residence of A. McKerrow, Esq., is near Shag Point, and both these places are in the Waihemo Electorate, and the beneficiary being a Highlandman there is no need to enquire into his qualifications for preferment. The case of Albert Barns, Esq., of Wanganui, is one deserving of some gentle comment. He has been a strong Party man: to mention this is, perhaps, superfluous—but his energetic canvass on behalf of Mr Willis for the Wanganui seat entitled him to some solatium for the defeat of his champion. Nor were his aspirations received with strait-laced excuses or objections, as the above-quoted Gazette, notice testifies. What Parliament has to consider is this: Does Alfred Barns, Esquire, of Wanganui, possess the commercial qualifications to inspire confidence in him as an official holding a position of trust to recommend advances of State funds on mortgage. For testimony as to his eligibility, we will put in evidence the following extracts from a judgment delivered by Judge Kettle in Wanganui on September 17th, 1896, and reported in the local papers, when Alfred Barns, Esquire, applied for his discharge as a bankrupt:—

"The debtor has been carrying on business as an auctioneer for about 25 years, and has also been carrying on a farm at 'Pukenui.' From 1880 to 1885 the auctioneering business was carried on in partnership with one Higgie. On dissolution on September 12th, 1885, Higgie was indebted to the firm £383. He agreed to go out on getting £300 over and above his indebtedness, and Barns to take over all assets and liabilities. The Bank of N.S.W. overdraft was then £1700 and the firm was evidently in financial difficulties. The only assets were the goodwill and stock at Pukenui. Debtor in his public examination admits that the firm was insolvent, but stated that the Bank induced him to carry on. The Bank manager in an affidavit contradicted this. After the dissolution and up to 1891, the business was carried on under the style of 'Barns & Higgie,' and then changed to 'Barns & Son,' the Bank carrying them on and the overdraft remaining much the same. On February 16th, 1891, the bankrupt gave to one, Mr McGregor, a mortgage over the Pukenui lease and stock to secure £600. On June 1st, 1893, bankrupt sent a statement to the Bank showing assets to the value of £4507, of which £1398 was live stock on Pukenui and goodwill of the lease £500. At that time the Pukenui leasehold and the stock on it was then subject to McGregor's mortgage, but this was concealed from the head office of the Bank. On three subsequent occasions he furnished statements similar to the first, emphasizing the allegation that 'all my assets are free from outside claims.' Between December, 1894, and the date of filing, July 1895, his overdraft was increased from about £1700 to £3800. The Bank proved for £5722. In the public examination of the bankrupt he explained this discrepancy as follows:—' I attribute the increase of my overdraft at the time of my filing, to payment of Trust account, and the discontinuance of the discounting of the bad bills.'

"In March, 1895, bankrupt executed an absolute assignment of the Pukenui lease to McGregor without informing the Bank, and shortly afterwards filed. He had been to Wellington and had seen the Inspector, and arranged to come back to Wanganui and file at once. He did not do so, but went up to Pukenui and made some arrangements as to the removal of stock which were claimed by his wife. The stock were ordered by the Court to be sold for the benefit of the estate. His filed statement of liabilities shows £6389, but the proofs put in amount to £8074, or £1685 more than he said. The assets are put down at £1568, including Pukenui stock £1000 which, when sold, realised £400 odd only. The debtor explains that the reason he put the stock down as unencumbered was that he had been advised that McGregor's security teas invalid."

The Judge went on to say. "He is unable to produce the Fair Cash Book and ledger prior to 1892. I am not at all satisfied with his explanation as to these books being lost. . . . The debtor did not produce any of the rough balance-sheets nor does he seem to have shown them to the Bank. Messrs Liftiton and Rodwell, two accountants, were employed to examine the books. Their reports say:—' As the books of the bankrupt were not posted, and many ledger accounts not opened, it was manifestly impossible to get at anything like an accurate idea of the bankrupt's position from the books. . . . Referring to the books as a whole we may say that for all practical purposes they are almost useless. There is no record of any balancing or any attempt to balance, and consequently the bankrupt had nothing to guide him.'

"Th'he debtor kept no separate trust account as required by the Auctioneers' Act, 1891, and section 19 of that act provides a penalty of £100 fd for such failure. He paid all sale moneys to his ordinary account and thus kept his overdraft much lower than it otherwise would have been.

"McGregor's security was always kept concealed and the stock represented as unencumbered. The bankrupt's assets were always grossly exaggerated. He admits that the statements prepared by him were misleading and intended to mislead the head office of the Bank. His letters to the Bank all go to induce the belief that the whole of the stock was free. The principal wrong was the concealment of McGregor's security, and misleading reports. . . . The bankrupt admits deliberate fraud and deceit in dealing with the head office of the Bank. It is the duly of the Court to punish commercial dishonesty of this kind. This case is not altogether one of a man of over sanguine temperament making exaggerated statements, but one in which by the bankrupt's own admissions he has been guilty of deliberate fraud and deceit. I think the Court would be failing in its duty if it did not suspend the debtor's discharge for a considerable time, and I would point out that section 132 of the Bankruptcy Act, 1892, provides that an order of discharge does not release a debtor from—
"(a)Any debt or liability incurred by means of any fraud or fraudulent breach of trust to which he is a party;
"(b)Any debt or liability whereof he has obtained forbearance by any fraud to which he was a party.

"The debtor's discharge is suspended for three years.

"The only other matter that calls for remark is the statement made by the debtor that Downes, the manager of the Bank, knew his (Barns') exact position, and was aware that the head office was deceived. Mr Downes's health was such at the time that he could not be called as a witness, but a statement in writing by him, denying that he knew of McGregor's security, was put in. Downes has since died, and it is therefore impossible to get any further information from him. I cannot, on the bankrupt's ex parte statement alone, conclude that Downes was aware deception was being practised. The bankrupt sets up a conspiracy between himself and the bank manager to deceive the head office; but, even supposing his statement to be true, I cannot see that it can he pleaded in extenuation or mitigation of his (Barns') conduct. In my opinion it makes his conduct all the more reprehensible. I am not called upon to decide whether the bankrupt's statements as to Mr Downes are true, but I certainly would not condemn a dead man on the ex parte and uncorroborated statement of the bankrupt."

The Public Accounts.

The Public Accounts for the June quarter are published in the Gazette of July 22nd. Among those worthy of analysis is the one relating to the Lands for Settlement account. The purchase money paid to date is as follows:—
£ s. d.
To March 31st, 1894 37,542 0 4
To March 31st, 1895 27,715 2 0
To March 31st, 1896 166,055 7 0
To March 31st, 1897 310,364 10 6
To June 30th, 1897 96,645 6 7
£638,322 6 5
To this must be added accrued interest, cost of management, cutting up and roading not shown in the accounts. Taking, however, the bare cost, the interest charge at 3 ½ per cent, on the purchase is now £22,342 per annum. As against this the State has received the following sums for rents and lease fees:—
£ s. d.
March 31st, 1894 785 16 7
March 31st, 1895 969 13 4
March 31st, 1896 5925 2 8
March 31st, 1897 19,628 19 6
27,309 12 1
For June quarter 6,056 12 8
Total rents, &c., for four years £33,366 7 9

Under the conditions lessees pay rents in advance half-yearly, and as several estates have been recently thrown open the large sum received in the June quarter of this year is accounted for. But on the whole it is evident that the Colony is making a huge annual loss, and, until a proper balance-sheet and profit and loss account of each of the estates is published, it will be impossible to arrive at the true stated affairs regarding this experiment in Land Nationalisation. To those who are advocates of the system a genuine statement would provide indisputable facts to argue from, but it must be admitted that the figures in the Gazette are meagre and unsatisfactory in the highest degree.

The same remarks apply to the statements of the Cheviot account.

The Working Railways Account.

The Kailway revenue is increasing rapidly, for the annual revenue showed the following expansion:—
March 31st, 1896 1,182,279
March 31st, 1897 1,287,139
Increase £104,860
While the June quarter's increase was nearly up to the average:— page 2
June 30th, 1890 280,077
June 30th, 1897 302,641
Increase £21,964
But on the expenditure side there is an incongruity difficult of explanation. Last year it was £776,747, and in the previous year £743,070. an average of £190,000 per quarter. The expenditure in the March quarter, 1897, was £289,824, in the June period only £97,782. and in the corresponding period of 1896 £135,350. Although some of the discrepancy can be accounted for by the fact that both revenue and expenditure are larger during the summer season than in the winter months, this does not explain why the expenses went down £37,568 while the income increased £21,964 in June. We offer two solutions of the apparent paradox. Parliament votes salaries and wages, repairs and renewals, oil and tallow, compassionate allowances and miscellaneous in the Estimates in a manner which makes it impossible to analyse where or whether maintenance and repairs are paid from railway revenue, or are charged to capital account. By dissecting the figures the following result is arrived at:
Voted for Salaries and Wages £600,930
Voted for Stores, Rails, &c. 177,855
Total Working Railways Vote £778,785
Here, then, is a quarterly expenditure of £150,000 in salaries and wages, which cannot vary except as regards casual labour, which does not affect the permanent hands. How then has the Department contrived to make £97,781 perform the functions of £150,000? In all the tables in the Railway Return wages and material are lumped together, and the only information available as to permanent way materials renewed is in Table 16, showing that 16,190 rails were relaid—mostly 53lb. These would be equal to about 3200 tons, of a value of £7 per ton, say £22,400, and 214,474 sleepers, value say 4s. including freight—£42,895: total, £65,295. There are to be provided beside these repairs to bridges, fences, gates, wharves, buildings, drain pipes, damages by floods, &c., to say nothing of coal, oil, renewals of locomotives, &c., and, as traffic increases, it is only natural to suppose that renewals and repairs increase with it. But the statistics of imports show otherwise, as the following extracts prove:—
1893. 1894. 1895. 1896.
Rails and Railway Material £54,941 £42,797 £46,988 £32,654
Telegraph Material £6,908 £10,480 £18,865 £567
Miles of line opened 17 62 45 21

It is no secret that the Hawke's Bay floods caused such damage to bridges, &c., that the permanent-way officials were at their wits' end for piles and other bridge material. It seems clear that necessary stocks have dwindled till the service is below the standard of efficiency to cope with sudden calls upon it. In fact, both the Traffic and Maintenance Departments are starved. This improvidence and saving at the wrong end is conspicuous in other branches of the service, notably in the defences of the Colony, where trained artillery volunteers have to be disbanded because of having no guns. Indeed, judging by the scanty material being imported for the Telegraph Department and others, it would seem that the present Administration will leave their successors short of even pens and red tape when they vacate the Cabinet-room.

The [unclear: other] solution of the paradox is clearer. Although the Treasury accounts published on July 22nd only account for a Railway Expenditure of £97,782 for the quarter, the Railway Returns published in the Gazette of May 27th. show that £135,696 had been spent at that date. There must be something lax and deserving of reprobation when moneys expended by so highly officered a department as the Head Office of the Railways, who arc paid £40,000 a year by the State, do not furnish the Treasury with their May accounts in time for publication at the end of July, or the fault may rest with the Treasury. Moreover, the June balance-sheets show that officers in the Colony held on Imprest on June 30th no less a sum than £239,138. Can any member conscientiously call this careful administration? The Imprest system may have its advantages, but if a quarter of a million be entrusted to officials, it surely ought to be accounted for once a quarter at any rate. There is a further sum of £55,321 shown to be held by officers of the Government in London, altogether £294,459 drawn by Imprest by officials. That the power to draw money by Imprest from the Treasury is not confined to heads of departments or permanent officials was instanced recently by the finding of a telegram in a place of public resort, worded as follows:—

"Place £100 to credit of my imprest account at Wellington on Thursday, July 1st.

J. C. McKerrow, Pahiatua."

This was countersigned, "Refer to Lands and Survey Department, R. J. Collins, June 30th," and stamped, "Received for audit, July 1st." The finder, through his solicitor, wrote to the departmental head of each Department and to the Acting-Premier, asking to be relieved of the possession of a State document, and it was claimed by the Hon. Mr McKenzie. How official documents come to be so far astray from proper custody is as curious as the fact that the sender of the telegram should be permitted to draw on the Treasury in such a peremptory fashion.

Another item in the quarterly accounts requires looking into. The Civil List for the quarter just ended shows an expenditure of £5446, as against £5308 for the same period last year. The difference is only £138, but is accentuated by the fact that during the 1897 period we had no Governor, and the Administrator only draws half the Governor's salary of £5000 and half his own of £1500. Naturally there ought to have been a saving of £812 in place of an excess of £138.

It is only just: to the Audit Department to state that the following memo is attached to the Public Accounts:—" The foregoing accounts have been examined and found correct, except as regards Customs, Railways and Territorial revenue, receipts which are not examined by the Audit Office. J. K. Warburton, Auditor and Controller-General."

The Awarua Election.

The Colony has to bear the expense, and the Southland electors the turmoil, of a bye-election, because the Hon. J. G. Ward desires to remain in politics even if an uncertificated bankrupt. The mere fact of his becoming a candidate in December last, knowing at the time what was impending, was injudicious and something worse, but his announcement of again seeking the suffrages of the electors because of the prominence he had brought Southland into smacks of impertinence when read beside the sensational evidence in the Supreme Court. As a matter of expediency it might be well for the future of New Zealand if he were returned. Our reputation as a Democracy has been so smirched that a few more splashes will hardly affect us, and his return will bring the inevitable end nearer. But with a view of keeping up the spoils to the victors policy, Mr Ward and his supporters are promising the Awarua electors that £1500 will be found for re-metalling a road near Invercargill which the County has kept in repair for 30 years. The Boss Platt ring of New York might study the methods of the Democracy in this Colony and pick up a few wrinkles. It is only just and proper to point out here that, although the Hon. Hall-Jones has denied that corruption has had any part in the administration of State affairs, that the following persons have benefited materially:—W. Lee Smith, who cost the Colony £1100 as Commissioner to Canada, and who subsequently stood in the breach as a friend desirous of purchasing the Ward liabilities, which offer Judge Williams refused; Mr Carswell, whose business was absorbed by the Ward Association on representations made by Mr Watson then Inspector of the Colonial Bank, Mr Carswell was soon after appointed Valuer under the Advances to Settlers Act at a salary of £500 with the usual perquisites; Mr Hayes, who was a manager of the ill-starred Hokonui Coal Mine, has been made a Government Inspector of Mines; Mr McKeown, another Association employee, is now Inspector of Labour. We see also the Southland News advocating Mr Ward's candidature on the grounds of "morality." One of the proprietors, the Hon. H. Feldwick, M.L.C., owes his appointment, with its pay and privileges and State advertising on a liberal scale, to the present Government. The Hon. Hall-Jones' views on "corruption" might be modified were he to consult a dictionary giving the root or derivative meaning of English words.


The Right Hon. Dr. Seddon, L.L.D.'s, utterances at Home are not likely to modify the contempt New Zealand politicians have been held in of late years by the commercial magnates. One instance is enough. Dr. Seddon was interviewed in a cab by the reporter of the London Evening News, a halfpenny sheet mainly devoted to

chronicling the side-lights of the Police Courts, and he is reported as follows by the scribe who accompanied him in the cab: "That," pointing to the roof of the vehicle, "would not do for us. We ride in landaus in New Zealand." When asked what sort of a field New Zealand is for emigration he assured the reporter emphatically, "There is not a pauper in the Colony."

It is also reported that the Minister of Lands will probably resign after the session. In the light of the figures given elsewhere as to the total breakdown of his land experiments, and the fact that he and others have acquired during their terms of office what would have be considered wealth by many worthy colonists, it is highly probable that not only Mr McKenzie, but others as well, will gladly abandon the fort, and leave others to reap the whirlwind they have sown.

Then the Hon. Hall-Jones, acting apparently on orders from headquarters, has started another borrowing campaign, and, if the newspaper reports of his speeches are not altogether at fault, he must have been sadly led astray by the Customs authorities when he said that, although the Customs receipts had increased, that this was through luxuries such as apparel to order, beer and spirits. The duties collected on the first-named item was about £700 in 1890; although the duty on English beer was a trifle more the quantity was less, and spirits remained about stationaryy. But apparel and slops, used entirely by the workers, increased by 225 per cent., and it is very clear that the colonial manufacturers and tailors are chiefly supported by the intermediate classes between the grades of Cabinet Ministers and bona fide workers too poor to wear Tailor-made suits.

With respect to this Minister's instability of mind a striking instance has recently occurred in connection with the shelter sheds at Wellington. A few months ago the Premier announced his intention of pulling them down, having been urgged to that by the Carriers' Union. The Corporation stood its ground and gained its case in the Supreme Court. More recently Ministers have announced that they intended to take the site for a Railway Station, but as the site is at the end of the Queen's Wharf there were grave objections to this. The Hon. Hall-Jones, being more desirouas of pleasing the carriers than the City Council, announced his determination to get rid of the sheds and put, up a station. Last week the carriers and cabmen altered their minds, as they found the sheds were a great convenience to them, and a telegram to that, effect wars sent to the Minister in Auckland, who immediately gave orders to stay any action regarding the acquisition of the site. It does not require the gift of prophecy to predict that no railway station will be erected there.

The Hon. Thos. Thompson has courteously received a deputation during the month whose business was to alter the law with respect to the collection of debts, by which persons owing sums under £20 would be virtually relieved of further trouble. The urbane Minister replied he would take the request into his favourable consideration. Curiously enough, the chief spokesman in this connection is notorious in the facility with which he obtains interviews with Ministers, and with the operation of judgment summonses as well. It must be highly gratifying to the Minister of Justice: to be able to obtain expert evidence outside the legal profession on matters pertinent to his department.

Printed by W. H. Stewart & Co., Willis;, Street, Wellington.