Speech delivered by the Hon. Sir R. Stout in the House of Representatives on the 1st August, 1894.
"I propose, on certain conditions, to ask the House to assent to legislation authorising the raising in London of a sum not exceeding £1,500,000 per annum, to he advanced to settlers in the colony on freehold security, and I propose that 3½ per-cent. inscribed stock be issued from time to time to provide the requisite page 4 amount. It may not follow that in the course of a year the whole amount named will be raised for the purpose of advances."
The policy Bill—for of course it demands a Bill—may not pass, but, on the other hand, it may, and the money will have to be borrowed. There is no statement there that only half is to be borrowed; the statement is that the Government propose that the whole of it shall be borrowed. Then, I ask honourable members to remember that the borrowing is not to stop with this two millions and a quarter that I have mentioned. We have several other items for which we have to borrow. There will be several thousands, I suppose, for the naval and military settlers; and we have to borrow for loans to local bodies. Do honourable members know that already this year we have borrowed £40,000—that is to say, during the first quarter of this year—for this purpose? Then, for the purchase of Native lands we have this year already borrowed £50,000; and we have to pay sinking funds, and to borrow again for this purpose, which will amount, I estimate, to about £117,000. If you add that together, you will find that the amount to be borrowed is outside a quarter of a million, while the amount with the money borrowed during this quarter is over £2,700,000. Now, that is pure borrowing for expenditure; and, if you add other items that come in in the table, the amount will not be for short of three millions for this year, leaving out altogether the question of Consols—leaving out the question of borrowing from the Insurance Offices and from other establishments. That is for expenditure during the year. There is one point that might be mentioned if I wished to paint a gloomy picture. As the Treasurer said, we have the Government pledged for the debentures of the Midland Railway to the extent of £018,000; we have also the contingent liability of the Bonk of New Zealand to the extent of two millions. And then, Sir, we have other items to follow that will come in which I have not put in, in reference to various items which always come in. These amounted last year to £700,000, so that at the lowest estimate at which it can be stated the borrowing this year will amount to at least three millions. And I do not know of any one year since the inauguration of the public-works policy in which such a large sum of borrowed money was ever placed in the hands of any Ministry for expenditure during twelve months.
Mr. Seddon.—What about the five millions in 1879 ?
Sir R. Stout.—" What about the five millions in 1679? "asks the honourable gentleman. That is another proof that he knows little of finance. That five millions was not to be spent in 1879. Unquestionably, part of it was to pay for debts already existing. I say that no Government has ever had placed in its hands three millions for expenditure in one year. But there is not only that: they are to go on borrowing every year no less a sum than two millions and three-quarters, and there is no end to it.
An Hon. Member.—No.
Sir R. Stout.—I will show how it amount to this if the honourable member asks me to repeat it. I say the borrowing of this two millions and three-quarters is to go on forever. I ask, where is the country that will stand this strain? Where is the boasted policy of sell, reliance, after this? I say this borrowing policy we are now inaugurating is a borrowing policy that I believe no country in the world was ever asked to face, except in war-time, and I declare it to he an audacious proposal, and one that I entirely object to. I have not the time to go into the other details, but I wish now to point out one thing, and one caution that I give to those who call themselves Liberals. I say it is the Liberal programme all over the world to try not to put the State under the heel of the debenture-holder. As has been said by a celebrated writer—I have not the time to quote it at length, but if honourable members will turn up Laveleye's book on "Democracy" Volume 1, page 306, they will find—
Mr. Ward.—Is it interpreted?
"These enormous debts which States and towns contract in emulation of each other are bad for the democracy. The people become the prey of the debenture-holders. It is for them that they work and that they are deprived of necessaries. This is the new form of slavery. Their condition becomes like to that of the Roman proletariate, under the law of the XII. Tables, who were cut in pieces so that the creditors might be satisfied. And when this happens the modern Shylock must have his pound of flesh.
"The interest of the debt is more grievons than the rent of land. If prices fall the proprietors must diminish their rent, bat the interest must be paid—yea, when the taxpayer must deprive himself of twice as many objects to fulfil his bargain."
So he goes on. I ask, what are we doing now? We are placing this fair young country under the heel of the debenture-holders in London. That is what we are doing. It is all nonsense saying we are only going to the London money-market for one million and a half to lend to the farmers. What did we go There last year to do? Our 3½-por-cent. Consolidated Stock bonds issued since the 31st March of this year amount to no less a sun than £G81,000. This Consolidated Stock belongs to the London debenture-holder. Last year what did we go to the London debenture-holder for? We asked for £250,000 for the purchase of the Cheviot; we went for, practically, something like £730,000 to the London money-lender in order to pay our way. It is all nonsense, therefore, saying we are not going to the London money-lender to obtain this money. I say, if .this scheme which; the Government have put before us is carried out, we shall be going to the London money-lender every year for from two to two and a half millions, and we shall thereby be pledging this fair page 5 country—mortgaging it virtually—to the London money-lender. For what purpose? I say we do not require it; it is not necessary. My time presses, and I am very sorry, for I must pass on, although I wished to enlarge a little upon that point. I now come to one other thing about which it is absolutely necessary I should speak, and that is the lessons we have heard so much of about the Liberalism in this House. In what position are we now placed? In no Parliament in the world have Liberal members been treated as they have been treated in this House this year. They are not allowed to have souls of their own. They are not allowed to have an opinion of their own. Every Bill that is proposed by the Government is to be forced upon them at the point of the bayonet. If they do make a suggestion in reference to any Bill they are told they must withdraw it. They are afraid. They are driven like dumb dogs into the lobby. They are terrorised over in the position in which they are placed. Time after time that has been done.
An Hon. Member.—Oh!
Sir R. Stout.—The honourable member has had it done to himself, and in his own inner soul he must be ashamed of himself. I need not refer to the question of the Sergeant at-Arms and other things; but that is the position, and Ministers now think that you can have no Liberalism except you have an autocracy: and you are setting up an autocracy, not only in this House, but also in the country. What is to be the Liberal programmer now? We are told it is "Spoils to the victors"; and I say it is that which damns any democracy where it is started. It ruins it. What does a democracy exist for? It can only exist for one thing—pure administration and progressive legislation. You cannot get pure administration if you have spoils for the victors. It is that which has ruined the United States of America. It is that which has mode that fair country what it is. With its Republican form of government, and its Liberalism, it might have boon a pattern to the world. Now see bow low it has sunk I—all through this policy of "spoils to the victors" that has been inaugurated, I am sorry to say. When I was in office [struggled against such a system. I introduced a Civil Service Reform Act, which took all kinds of patronage out of the hands of Ministers. They were to have no patronage at all. The only way they could exercise any patronage was in the appointment of experts, and when they were appointed their names had to be laid on the table of the House, so that there was every safeguard to insure that appointments when dealt with were made public. The other appointments were taken out of the control of Ministers. That is apt to be stopped; it has been stopped already. I do not wish to refer to anything more than this; but what has been done, for example, in reference to the Railway Department? There was a case of "spoils to the victors." and I am told on good authority, which I believe is perfectly reliable, that prior to the election there were meetings between one or two Ministers of the Crown and the railway union in Christ church, at which were mentioned the names of the men who were to be removed.* The condition was that the railway union wore to give their support to the Government at the elections. Does any honourable member deny it? Give me a Committee and I can prove it. I can say, further, I have got a list of the names of the men who were to take their places. They were also mentioned. And, in addition to that, what happened? Not only were their names then mentioned, but one of the Railway Commissioners met the railway union men and took up this list to his fellow-Commissionors to carry out this bargain that had been made; and what happened? They said they could not carry it out. One of the Railway Commissioners objected to carry it out; but they would lower the salaries of the men whose removal was desired, in the hope that they would resign, the salaries were lowered; and the railway union was told afterwards that, after the session, then would come the time when the "spoils to the victors" compact was to be carried out. Is that true or false? I say, let us have a Committee, and let us see whether that proposal was not mode by a Commissioner to his fellow-Commissioners, and see whether the statements I have made can be proved or not. I make the statement from information I have every reason to believe is correct. I have not mentioned the men's names, and will not do so until I get a Committee, because I do not think it is fair until they shall have an opportunity of dealing with it themselves. However, I believe that statement to be absolutely correct. There is one other thing that I strongly object to in this Budget, and that is, the dealing with the savings of the people in the way it is proposed. It is said the savings-banks would not be absorbed; but there is something worse than that, which I have not time to deal with. I will pass on to the next thing, and that is, the way in which insurance, which is simply another form of the thrift of the people, is to be checked, if this Budget is carried out. Even the solvency of the New Zealand Government Insurance Association is threatened; and not only is it threatened, but it will severely endanger its competency to compete with other offices. What is to happen? We have now, I believe, over £2,000,001) in that Association. Only, I think, about one-fourth of that is mortgages on real estate; the rest is mainly lent on debentures. It is, I expect, mainly 4 per-cent debentures. The Government Insurance Association is founded on this class of tables—namely, that they are what are called 4-percent, tables. If you only give 4 per cent, there are always some sums that will remain uninvited, and the result will be that you will not be able to carry out your tables. At all events, you will not be able to give insurance profits to those who have worked hard and page 6 saved for their widows and children. Is it honest or fair that they should have their profits interfered with, and that they should not be allowed to get the best interest they can from the Association? What right has the State to step in and say that it will seize part of their earnings and apply it to general State purposes? Sir, it is entirely indefensible. The same thing was to be done to some smaller extent in the case of the other associations. The Treasurer stated I was quite wrong in assuming that more or less of the real estate, including buildings, was not to be taken as securities. This is his own Budget. The words used are "New Zealand securities." He said on cash deposits the rate of interest was to be 4 per cent. only. What is meant when you speak of New Zealand securities? You do not mean mortgage securities. I understood it to refer to New Zealand Government securities, and I assumed it was 4 per cent., as for the cash deposit. I say that is entirely contrary to what should be the aim of the Liberal party in dealing with the savings of the people. The thrift of the people ought to be encouraged in every possible way, and, to encourage that in every possible way, you should not tax their earnings and their savings; but you are doing that in this proposal. What are you doing with your Consols? I see, from a return laid on the table in reference to our Post-Office Savings-Bank, that you had at the end of the your more than three millions of money in the Post-Office Savings-Bank, and you have reduced the interest of the largest depositors. I do not Bay the Treasurer was wrong; I believe, under the circumstances, he was right, because he found, no doubt, that the other banks, through the present state of insecurity, were being depleted of their deposits, which were being put into the Savings-bank, and the savings-banks are not meant for large depositors. I do not, therefore, see that There is so much wrong in lowering the rate of interest for very large sums. I apprehend that, so far as small deposits are concerned, we should not lower the rate of interest; we should increase the interest on them. It simply means helping them to save. It is doing for them the same as we are asked to do with the old pension scheme. It is giving them the same help perhaps for a rainy day; and I do not think it is the duty of the State to say that the interest of the people of small means should he kept down to the very lowest amount. Now, I wish to say what should be our policy with regard to giving aid to farmers. If the State has plenty of money to lend, it should lend money on mortgage and not on debentures. The Now Zealand Government Insurance Association could have had a million more lent if it had not been taken up by Government debentures, Treasury bills, et cetera. We should have given this relief already to the farmers at a fair rate of interest. But this should apply to more than the freeholders; it should apply to the leaseholders also. It would enable them to carry out their work as Crown tenants. And not only that: we should have taken the money from the Post-Office Savings-Bank and also from the Public Trust Office; and we could have gone to the Government Insurance Association, as I have said. The money is there, and, if we took three or four hundred thousand a year, that would be ample to aid our farmers. And why should we not aid our formers in this why? It would be only lending from ourselves to ourselves, and we should not be liable to the foreign money-lender at all. That would be a reasonable and fair scheme. It would give help to our poor and small struggling farmers, especially to those who had not the freehold, and who have to make considerable improvements, and it would enable them to make their improvements. That would have been a stales, manlike proposal. Why should we go to the foreign debenture-holder and pledge our colony to him? It is starting a system of plunging, It means that you will lose money by it. You cannot be more careful than some of these men have been in the past who have had the management, for instance, of our trust and loan companies. But, with the greatest tare, they have found they have made many bad bargains. And so will it be with the State. It is said you must have capital. If yon it quire to borrow money, as I have no doubt you do, for the purchase of Native lands and other lands, a small amount—I believe, £50,000 a year—would be ample, and to aid the small farmers you need not have gone to the foreign money-lender. For the rest, you might have raised that amongst yourselves, and the amount could have been safeguarded by 1 per cent at least of sinking fund, so that you could reduce the liability; or you could have used yon sinking fund for the purchase of land, and then the State would have been able to [unclear: pur.] chase land, and be free from debt. What is this policy? The policy, so far as self-reliance is concerned, is cast to the wind. There is no such thing as self-reliance. You are going to pledgo our colony to the foreign debenture holder, and I do ask members of this House to remember that they are not legislating merely because we are in temporary difficulties. I apprehend that they ought to recognise that they are legislating for the future; and I ask them, what is to be the future of this fair colony if we are to plunge ourselves into a state of having to meet the demands of the foreign debenture-holders? I say it mens injury and ruin to our children. It may mens temporary relief to ourselves; but I ask the House to look to the future. I ask this House to think what the future is to be. I alse say this: that there are many ways in which we can give assistance without these [unclear: suds] cious borrowing proposals. If we have to spend money on roods, the amount ought to be limited, we are spending now up to £300,000 or £400,000 a year on roads. That mean £250,000 of this borrowed money, a certain proportion of it from the Public Works Fund. A certain proportion of the fund went for advances on blocks of land. I think £36,000 was so spent last year. I say this colony cannot afford to spend £300,000 or £400,000 a year, and page 7 we must go more easily. We cannot afford to spend that on public works.
Mr. Hogg.—That would stop our public works.
Sir R. Stout.—Why not stop our public works, if they exceed our means? Are we dealing as prudent men would deal,—as our means will allow? We are merely plunging our colony into debt. Then, I believe we should have more economy also in dealing with our roads, by having the roads placed under one management. I entirely dissent from the proposal to have the making of roads taken from the Public Works Department. The Public Works Department should have the sole charge of the roads, and it should manage the whole of them. It ought not to be left to the Lands Department at all. The Lands Department has got enough to do in the survey of the land, and to see that the land-laws are complied with, without troubling itself with doing public works. It means, practically, that we have two sets of Engineers, one for the Public Works Department and one for the Lands Department. Now, I have noted down here several other things I should wish to refer to, but I find my time is nearly up, so that I should not go into them at proper length, and therefore I wish to say one or two words more about the Statement,—in reference to several other things mentioned this evening. One thing I have not dealt with was the charge I about this new borrowing system. Sir, there is ft difference between borrowing and spending. It is true, with these half-million Consoles, there has been only half a million this year and half a million next year. But if one takes in the amount of money the Treasurer will have at his disposal, coupled with the contingent liability to the Bank of New Zealand, the colony within the next eighteen months will be more than six millions in debt—when you take the contingent liability.
Mr. Ward.—The Treasurer will not have the £1,500,000 at his disposal at all.
Sir R. Stout.—The Treasurer must have it at his disposal, and no Lending Board can stand between him and this £1,500,000, though he gives it to irresponsible persons, the same as we have given the railways. We shall have the tame difficulties that we have in dealing with the management of the railways. This Lending Board must be under Ministerial supervision; and, if not under Ministerial supervision, then it is all the worse. It means that we are giving over to irresponsible people the control of £1,500,000; and does the honourable gentleman say that is sound finance or sound administration? It may be said—and this is the only thing I shall refer to—as was said by some honourable members in this House when the public-works policy was brought down, that we needed money, and we needed it soon. We need money and we need it soon; but if we are to be prudent men we shall need to rely upon ourselves. I submit that there is no need whatever, if we only are prudent and careful, to go outside this colony to borrow money. We can do without going to the London market, we can leave the London market, and, as to money for all our wants, that will be got through private sources, and I think our people can do very well without our assistance. It is not merely what this £1,500,000 a year will mean. So far as the fall in prices is concerned, I submit that those prices will not be added to by lending the farmers money, even up to two-thirds the value of their laud. There are some people who get money on their stock to carry on their business, and there are farmers in this colony who are mortgaged for three-quarters of the value of their land, and perhaps more; and the men who require most aid will get no aid under this Bill. I should like to know, if the State is to lend money, where is it to stop? Is it to stop at the farmers? Why should not the manufacturers have State aid as well as the farmers? Where are you going to draw the line? If you make the State a money-lending agency, such as the honourable member for Avon said, what will that mean? It will mean that you will have a system such as the London County Council proposes—State pawnbrokers. And why should not a poor man, who has got no money in his pocket,—whose children are sick, and perhaps starving,—why should he not have State assistance? How are you to draw the line? If the State is to help these people, it has a right to lend money not only to one class, but to everyone. What is the principle laid down in these proposals? That the State is to have full control of money in this colony. It is to be entirely removed from private hands. I believe, if we did that, we should set up a tyranny such as never existed in any part of the world, coupled with spoils to the victors, coupled with autocracy and tyranny in Parliament—a majority of this House not allowed to express their own opinions in case a Minister may resign;—what is more, this House, most improperly, most unconstitutionally, threatened with a dissolution if they dare to refuse to pass a Bill at the dictation of the Minister of Lands. No Minister over uttered such a threat. Are we to have that? We are to have the second Chamber flooded also if it dares to come between the wind and his authority. Are wo to permit that? That is probably what we are to have if the State is to have the solo control of the capital of this colony. Are we to have a Liberal Government? Certainly not. We are to have in this place a pure autocracy; and I ask those who follow Liberal principles to rise above mere personal considerations, and to vote as they think right between themselves and their consciences. It they do so, I feel sure the Ministry will have the good sense to acquiesce in that vote. This is, I believe, one of the gravest crises that have arisen in this colony. It is not the mere million and a half asked for on the London money-market, but it is starting a policy that I submit we cannot see the end of. Do you not see that you are pledging the colony not simply, as you think, to one million? If the farmers get this, do you suppose that political pressure will not be brought to bear by manufacturers page 8 and others? How are we to draw the line? I say, if the farmers are to get this money, I, for One, cannot vote against the manufacturers getting money. I cannot vote against the laboring-man getting his money too. I do not see any distinction between the one party or the other. And what is the position? It means, Will two millions satisfy the colony? Will three millions satisfy the colony? We are pledging this colony to the foreign borrowing of money year by year amounting to two millions, because if we borrow the money here we must next year inscribe the stock in London, and the result is, we are asking this colony to become a debtor to foreign people to an extent, I repeat, of over three millions a year. Where is our self-reliance? Where is our non-borrowing? There are not a dozen members of this House who, on the Hastings, were not pledged against foreign borrowing; and they are to throw their pledges to the wind, to think nothing of themselves whatever, and, after they have solemnly pledged themselves, to shot their eyes and swallow it. Where is their conscience? I give the Government every credit for doing what they consider best, and I hope I have said nothing in my speech to throw any slur upon them. They are doing what they think best for the colony, and I give them every credit for good intentions; but we ought in this House to save them from themselves, and to save this country from what I believe to be one of the gravest disasters that over threatened us.
Samuel Costall, Government Printer, Wellington.
* The statement that any Ministers saw the list of railway officers to be dismissed has been denied by Ministers, and the denial accepted by Sir R. Stout.