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The Pamphlet Collection of Sir Robert Stout: Personal Volume

Financial Debate. — Speech delivered by the Hon. Sir R. Stout in the House of Representatives on the 1st August, 1894

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Financial Debate.

Speech delivered by the Hon. Sir R. Stout in the House of Representatives on the 1st August, 1894.

Sir R. Stout.—Sir, I have listened to several financial debates, but certainly this is the most peculiar one that I have ever witnessed within these walls. There is an old French proverb which says that he who excuses himself accuses himself. And, Sir, we have had the Colonial Treasurer doing that this evening. I feel that I am placed at a great disadvantage in speaking, because one of the results of this autocratic Liberalism has boon that one is cribbed, cabined, and confined. In attempting to discuss a Budget like this it is simply impossible to deal with over forty items in this Budget within sixty minutes, and to do it so as to do justice to the speaker or justice to the subject; and I consider it is a very awkward result of Liberalism when members are prevented in Parliament from discussing such important questions as the issues submitted to us in this Budget. There is one thing I wish to say, and It is this: that I regret indeed, and I sympathize also with, the position in which the Colonial Treasurer is placed. I feel sure that If he had bad associated with him gentlemen who were able to discuss financial questions ire should have had quite a different Budget. He has been placed at this great disadvantage : that he has no Minister who can aid him In financial matters, or, in fact, in the discussion of them. Sir, that has been proved this evening, because no one will say that it is want of courtesy that has made the Ministry not follow the usual course that is followed in debates of this character. Sir, when the gentleman who rises on behalf of the Opposition to address the House speaks on the Budget it is the universal custom that a Minister should reply to him. No Minister has done that to-night. Why? A want of courtesy? Not at all. It is a want of ability; they were not able to deal with financial matters. Then, there is another thing which I think has been very unusual in this debate, and that is, that we have had, instead of discussing this Budget—which certainly is long enough and important enough to engage our attention—we have had the Colonial Treasurer spending a whole hour commenting on things he saw in newspaper, and reading up old newspapers the whole of the afternoon. Is that the way to discuss an important question like this? Surely it is one of the most important Budgets we have ever had, for it is a new departure in our politics and finance. But we have had an hour and a half's delivering the Budget, and have had another hour talking upon scraps of information from a newspaper. I think that is lowering the dignity of this House, if it is not lowering the dignity of the Minister. I wish, Sir, to bring before the House certain facts, and to emphasize them, before I deal with' the policy contained in this year's Budget, And the first thing I want to have a thoroughly clear understanding upon is this: Has our debt increased, is it increasing, and for what is it increasing? In doing that I can gather all my facts from the Budget. I am not at all accusing the Colonial Treasurer of slurring over anything. He has stated every fact on which I can rely. I make no charge of that kind against the Budget,—though one of the honorable gentleman's tables is wrong. But throughout this House, and throughout the country, we have had it continually proclaimed that we are not borrowing, and Ministers are continually proclaiming that our debt is not increasing. Now, Sir, let me state how our debt increased last year. We borrowed first for debentures, under the Consolidated Stock Act, £284,800; we borrowed for Nativeland purchases, £72,000; for land for settlement, £38,966; for Cheviot, £250,000; for loans to local bodies, £116,500; for naval and military settlers' certificates, £16,300: or a total of £778,263. Then, there was a difference) between our debt that we paid off and our new inscribed stock, because to pay off £902,000 we had to inscribe stock to the amount of £1,038,180, the difference being £136,180—making altogether £914,446 of borrowed money and increase of debt. Well, then, what did we do in paying off any debt? We paid off from released sinking funds the sum of £294,571, and £51,300: altogether, £345,871. That left a balance of debt of £568,575; but, instead of taking all our accrued sinking funds for that page 2 purpose, we inscribed part. If honourable members will turn to the Consolidated Fund table, No. 7, they will see to credit £90,371. That is simply borrowed money. We paid into the Public Works Fund £163,702. That, again, was borrowed money—making altogether £260,073, which brought our gross debt up to an increase for the year of £828,648. But our sinking funds increased, and they increased to the sum of £98,227. There is no difference in this amount from what was said in the Budget, only the Colonial Treasurer gave the not increase of £84,398. I take the gross increase and deduct it from £828,648, which gives the increase as £730,421, and leaves the net debt increased this year by the figures £730,421. Now, that is not an increase of debt, as some members on the hustings said, coming merely from conversion operations. There was an increase from conversion operations of practically £136,180. The rest was borrowed money used in aid of revenue, as I shall show. Now I come to the next point of importance—what have been the actual transactions of the year; and in dealing with them I leave out the amount standing to credit at the beginning of the year. I take, first, the comparison without taking in that amount. That amount, as honourable members will see from Table No. 1, is £283,779. Now, our total revenue, leaving out the credit I have mentioned, and leaving out the sinking-fund debentures which appear in Table No. 1, in aid of revenue—our total revenue was £4,368,537 16s. 7d., whilst the total expenditure was £4,386,384, leaving an actual deficit of £17,821 4s. 7d. Then, if we wish to consider the borrowed money for the year taken in aid of revenue, we have to add to this deficit £16,300, which was paying our debts in dealing with the naval and military settlers. Then, we carried £250,000 to our Public Works Fund. I have not given that as an expenditure before, but if you take that as expenditure it would bring the deficit up to no less than £284,121 14s. 7d. And, if you add to this again the borrowed money and money expended in Cheviot, honourable members will see that the total deficit, taking this as expenditure and not as borrowed money, would have been £544,341 14s. 7d. Now, it may be asked, If there was then this deficit, how is this balance of £290,000 arrived at? I will show that. We have first to start with a credit at the beginning of the year of £283,779 his. Then we brought to the aid of the Consolidated Stock Act of 1884 £284,500. We borrowed for Cheviot £250,000, and for military settlers £16,300, making a total of £834,580. I have left out the cross entries of £294,571, because they will not affect my calculation; and, if you take the deficit of £544,841, the surplus, as shown in the Budget, is £290,238. Now, I submit that is the position as I have stated it, and it is absurd for us to say we have a surplus. It is absurd to say that without borrowing—if we had chosen to do without borrowing—our revenue would have been sufficient; and it is no answer to say what other Ministries had previously done. The question we have to consider is, What have we done for the past year, and how docs our revenue stand? Now, the next point I come to is a point which has misled the last speaker, and which I am sure will mislead a great number of other members, and, perhaps, some people outside the House; I allude to Table No. 8, and I am sorry to say, for it is the only table in the Budget I complan of, that, as showing our financial condition, that table is simply a juggle in figures, entirely fallacious, and misleading; and I will show it If honourable members will take up Table No. 8 they will see that the Treasurer table credit for this: that there is an actual decrease of £141,020 on the amount that has to be paid for interest and sinking fund this year compared with last year. Now, that is entirely wrong, entirely misleading, entirely fallacious. I will test it in two ways. I will do so first in this way; Suppose the scheme which the Treasurer has announced at page 5, in dealing with Consolidated Stock, had been adopted lost year, whit position should we have stood in? That, instead of paying, as we paid last year, £1,885,697 "interest and sinking fund, we should only have paid £1,657,600. So that we have that difference: and I will explain in a minute how that difference arises. In fact, instead of them being a decrease in the interest and sinking fund, this year there is an actual increase of £87,077—no decrease at all. How, then, it may be asked, is this decrease shown? Honorable members must turn to the explanation of the Consolidated Stock Act. Under that Act it has been the habit to issue at the beginning of the year all the debentures necessary to cover the increases in the sinking fund at the end of the year. Last year we issued £284,500 in debentures, but this year we are only going to issue £117,800, and that includes also the first quarter, because the scheme had not been brought into operation until after the first quarter. Well, Sir, we issued £284,500, but the whole of that did not go into revalue There was no less than £169,700 that came back to us last year in redeemed bonds. It appears on the other side of the account. This year we eliminate that side of the account Strictly speaking, we are eliminating one side of that account, and the result is that this £141,020, supposed to be a decrease, includes in it bonds that were released and paid back by the Sinking Fund Commissioners at the end of the year. It is no saving to the colony. There is an increase in interest and sinking fund this year of £87,077; and therefore this table is entirely misleading and fallacious, and unless it is corrected it will go through the length and breadth of the colony that we are saving £141,020 in interest and sinking fund. We are not saving one penny. Suppose we carried out this year the scheme that was carried out last year, what would have been the amount that stood at? The whole thing turns upon conversion; and I ask honourable members to turn to the estimates under the head "Permanent Charges." I assume there has been no conversion of any of the stock under the Consolidated Loan Act If there had been no conversion of that loan, page 3 instead of there being a vote this year of £98,593, as honourable members wilt see at page 4 of the estimates, under the head "Permanent Charges," there would have been required a rote of £290,188 if there had been no conversion. However, there has been conversion, and I do not think it is fair to this House that that was not stated. That is the conversion that has taken place since the tables were prepared by Mr. Gavin. Honourable members will see that there have been large conversions this year. There have been large conversion operations since, the 31st March. If members will turn to the Budget they will see the particulars of the 3½ per-cent. inscribed stock. That amounts to £4,521,068. Now, if honourable members will turn to the estimates, they will see that the total amount of interest paid under the Inscribed Stock Act is to be on no less a sum than £5,202,451, showing that the debt under the inscribed stock has increased since the 31st March this year by "no less a sum than £681,383. Now, that inscribed stock is issued to meet debt owing partly under the Consolidated Loan Act of 1867. That appears to be plain from the amount of £738,000 stated in the estimates as now due under the Consolidated Loan Act of 1867. There has also been inscribed the stock of the released sinking funds under other Acts. And, apparently, there has also been inscribed—for we cannot find it in the estimates—the amount for the purchase of the Cheviot Estate; and, while there is a difference between these two amounts I have mentioned, as I have already said, I do not know where the expenses are, and we have no tables to guide us. I mention that to show the position in which we stand. And now I come to the real increase on the estimates. Instead of there being any saving in the estimates for the present year, if the estimates had been framed—that is, if this Table No. 8 had been framed—on the same basis as last year, they should show what we have to pay in the way of interest and sinking fund under "The New Zealand Consolidated Loan Act, 1867," and in conversions. The result would be that we should have to pay £87,000 additional for interest and sinking fund; and on the ordinary expenditure of our annual appropriations there is £54,655 of an increase, although these increases are without the supplementary estimates, and without other things I am going to mention. What has been the increase this year? Not less than £142,000. Now, what are the other things to be added? There is this to be added: I submit that the supplementary estimates, taking the average for a number of years past, may be said to amount to £50,000. Then, in the Crown-lands rating there will be £10,000 to be added; and then there is £250,000 for the Public Works Fund that is not included in these annual appropriations; but altogether it makes up £310,000 to be added to the expenditure. If we take the money at credit at the beginning of the year, and add the proposed expenditure to the other items I have mentioned, and then take the estimated revenue, it will be seen that that will only leave us at the end of the year something like a surplus of £31,000. Now I have dealt with Table No. 8. I now come to show some other figures that may be of importance. The first thing I notice is that there is a gradual increase of Treasury bills, although the increase, no doubt, has been caused not so much by borrowing in anticipation of incoming revenue as to get rid of the guaranteed debentures. The amount outstanding of Treasury bills on the 31st March, 1889, was £279,100; in 1890, £519,900; in 1893, £669,000; in 1894, £811,000. As I have said, of course this includes the bills issued to lift the guaranteed debentures, but I mention it to show the financial' position in which we are being placed; and the best proof of our ticklish financial position is this: that we are called upon to give in ways and means authority to raise the land-tax four months before its time, at a cost to the people of £6,700—that is to say, of those of them who have to pay the tax. There is one other point I wish to bring out, and that is the position of the Public Works Fund. We have only a balance in Part I. of the Fund, if we deduct the liabilities from the money in hand, of £48,916 on the 31st March. We have only in the North Island Main Trunk Railway Fund a balance of £50,000. It is true we expect to bring in to the aid of the No. 1 Account £250,000, and to bring in, in addition, I presume, sinking funds released which will come into the fund the same as they did last year. But it is not known how much that amount is at present. I see £173,800 down in the table for sinking funds in hand, and I presume that may be the amount brought in this year. There are various other points of finance I should like to touch upon, but I pass on to deal with what may be termed the policy of the Budget; and I see no cause to withdraw a single remark I made to the interviewer of whom the Treasurer has spoken. On the contrary, there are many things I might have said that would have placed the position in a far worse light, as I will mention before I have done. On the face of this Budget there is nothing but borrowing. It is borrowing writ large. I ask honourable members to remember that some of this borrowing is to be annual. It is recurring borrowing. We have, first, £250,000 to buy land. That is plainly, if the Minister of Lands gets his way, to be as eternal as his leases. Then, we have £250,000 for reading; and then, we have £250,000 for Native lands, which will include part of the reading. Then, there is one and a half millions to be lent to farmers. The honourable member said it was most unfair to say this one and a half millions was to be borrowed this year; but the Budget said it was to be borrowed this year, for the Budget put it plainly, thus:—

"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?

Sir R. Stout.—It is in French, but I will give the passage to you in Englishxs:—

"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.