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The Pamphlet Collection of Sir Robert Stout: Volume 23

Part III. — The Summary

Part III.

The Summary.

"False ideas may achieve a more or less extended, a more or less durable success—they can never extirpate their God-like assailants. Truth is patient—it does not easily surrender its hold 'on society—it never abandons its purpose—it even exercises some sway over that region where error reigns most despotically."—Guizot, Representative Government, 1852 ed., p. 68.

Let me now summarise my arguments against the Land Tax; and especially in relation to large holdings.

1. As its main primary purpose is avowed to be not revenue, but to burst up big estates, it should, of course, be first proved that big estates have some connection with industrial misery, or general prosperity; which has not been proved.

2. Even supposing that had been proved, it must also, of course, be shewn that there is now a lack of good available land here, and therefore that the existence of big estates is retarding general settlement; which also has not been shown—but the contrary is fact, and well recognised fact.

Thus, first of all, the premises are wanting; and thus there is no honest ground for, or honest reason in, any bursting-up policy.

But even if the premises were proved to exist, and if, therefore, a remedy should be sought for, then—

3. What is proposed, i.e., the land tax, is not a straightforward remedy, but merely a scheme, in its scope and principles dishonest—patently and covertly—and otherwise inherently vicious; because it is in the form of a tax in its nature confiscatory, and page 9 levied—either primarily, or subsidiarily—for other than a revenue purpose: and levied also apparently with the covert intention of compelling owners to sell to the Government at forced sale prices.

Moreover, it aims to effect its purpose in a sinister manner; and, forsooth, punishes a man for being more industrious, or thrifty, than his fellow colonists.

4. Further, if the tax were not dishonest, or otherwise inherently vicious, it is most impolitic for us, in cur present condition of urgent need of yeomen, to impose a land tax of any kind; i.e., to do anything which might deter such immigration, or which may dishearten small farmers: and of the utmost importance to inspire capitalists with confidence—not to oppress, harass, or frighten them.

5. Moreover, even assuming, for the sake of argument, that such a tax is not dishonest, or otherwise inherently vicious, or otherwise impolitic, it, as a lever to burst up big estates is not only a sinister, but an absurdly clumsy expedient; inasmuch as such bursting up could be effected simply, straightforwardly, and far more effectively by direct prohibitive enactment: under such special circumstances and conditions as might not render such prohibition open to the charges of dishonesty, or other vice, or other impolicy.

6. But the whole Land Tax scheme is otherwise a huge mistake—a miserablo clap-trap delusion. For we are dying of inanition, needing immediate tonics, not purges; which inanition cannot be remedied, and which immediate tonics can't be supplied by any such a tax, even if it were the grandest tax project devisable; because it can't supply our immediately urgent needs—Financial Invigoration (involving restoration of confidence) and increased suitable Population.

Moreover, who (except the Government at forced sale prices) is to buy the big estates, and when bought, where is the population to settle upon them, in addition to the land now available for settlement? because (a) it must take some little time for the Premier's yeomen to breed and rear sufficient sons for the purpose, and (b) because the Colony's insane policy has been for a long time past, and is still, to discourage immigration; and (c) because our legislative acts are not likely to encourage any such population to come. Further, even if such settlement could be made, a considerable time must afterwards elapse before settlement could affect materially the general prosperity of the Colony.

Nor must it be overlooked that if the Government intend to buy the estates in order to retail them, the purchases can only be effected by loans, involving, of course, the annual payment of a huge sura for interest additional to that now paid.

7. Finally, supposing that the main purpose of the Land Tax be revenue, then, as I have exhaustively shown (see, for instance, "The New Zealand Herald," 19th November, 1888), there is no need for any such a tax; and even if any need existed for any tax in place of the property tax (which, of course, I deny), then a very different tax, in our present condition, should be imposed. (See "The New Evangel," "The New Zealand Herald," July 8, 1889.)

Thus, the whole Land Tax scheme, apart from the admitted tax-upon-improvements blot, and apart from injustices, inequalities, and anomalies in detail, has no sound basis for its inception; and is, in its scope and principles, bristling with absurdities, profoundly dishonest, otherwise inherently vicious, and otherwise flagrantly impolitic.

Truly, the ideas and pranks of the Premier respecting big estates, and the alienation of Crown lands, are past understanding; not only in view of the facts and arguments that I have adduced, but in view of the connection of the Stout-Vogel Ministry with the grant of the huge area of 2,500,000 acres to the Midland Railway Company, (in which Ministry the Premier was Minister for Lands and Immigration)—to say nothing of the immense quantities of Crown lands sold by the same Ministry for cash, and of their having maintained the property tax through the whole term of office, and of the Meiggs' negotiations. (See also the Premier's speech on the third reading of "The Land and Income Assessment Act," Hansard No. 21, p. 325; and Mr. Fisher's speech on the Land Bill, Hansard, July 24, 1891, p. 499, et seq.)

Before, however, leaving this (Land Tax) subject, let me warn those unacquainted with standard writings on political economy against being misled by the misapplication of principles, or by quotations without the context; such, for instance, as the misapplication of the misleading passage that I give below.

For the superficial reader might suppose that the passage in question referred to a "graduated tax on land values," and would naturally presume that it is to be read without qualification; whereas it is patent, even upon the face of the quotation, that the passage has no reference to a "graduated tax on land values," but only to the taxation of unearned increment: and, moreover, is so subsequently qualified by J. S. Mill, that he, evidently, would not apply such a principle here, except in respect of future accruing increment—which, of course, involves entirely different considerations.

page 10

A cause which requires such artifices to bolster it up, must indeed be indefensible.

I now append the passage in question; and then add the context, and Mill's qualification—

1st. The passage, as follows, appeared in a letter in "The Auckland Star" of 22nd August, 1891:—

"Now, as to the justice of a graduated tax on land values, Mill thus expresses himself: 'Before leaving the subject of equality of taxation, I must remark that there are cases in which exceptions may be made to it, consistently with that equal justice which is the groundwork of the rule. Suppose that there is a kind of income which constantly tends to increase, without any exertion or sacrifice on the part of the owners; those owners constituting a class in the community whom the natural course of things progressively enriches, consistently with complete passiveness on their own part; in such a case, it would be no violation of the principles on which private property is grounded if the State should appropriate this income of wealth, or part of it, as it arises. This would not properly be taking anything from anybody; it would merely be applying an accession of wealth created by circumstances to the benefit of society, instead of allowing it to become an unearned appen dage to the riches of a particular class.'"

2nd. The context (see Mill's "Principles of Political Economy," 1871 ed., Vol. II., p. 409) is:—

"Now this is actually the ease with rents."

It would, however, be most disingenuous for any writer, quoting the sentence, to stop there. For .Mill goes on to say:—

"But, though there could be no question as to the justice of taking the increase of rent, if society had avowedly reserved the right, has not society waived the right, by not exercising it. In England, for example, have not all who bought land for the last century or more, given value, not only for existing income, but for the prospects of increase, under an implied assurance of being only taxed in the same proportion as other income?" &c., &c.

"For the expectations thus raised, it appears to me that an amply sufficient allowance is made, if the whole increase of income which has accrued during this long period from a mere natural law, without exertion or sacrifice, is held sacred from any peculiar taxation. From the present date, or any subsequent time at which the Legislature may think fit to assert the principle, I see no objection to deciding that the future increment of rent should be liable to special taxation; in doing which all injustice to the landlords would be obviated, if the present market value of their land were secured to them, since that includes the present value of all future expectations."

Mill, moreover, further says (p. 469):—

"In laying on a general land tax . . . there would be assurance of not touching any increase of income which might be the result of capital expended, or industry exerted by the proprietor."

The italics are mine.

I give the quotations pretty fully, so that it may be known that no colour is given by Mill to the confiscation theories now openly advocated; and which he is quoted as countenancing.

In view of the facts and arguments adduced, it seems almost needless to state that it is beyond my intelligence to realise how the Land Tax scheme can by any possibility benefit Labour, or any other class in the Colony.

But the absence of any sound basis of reason for its inception, and the sinister character of the scheme, and its patent and covert dishonesty, and its other inherent viciousness, and its otherwise grave folly, including its needlessness, are no mysteries to me; but patent, melancholy facts, which must result disastrously for the Colony, and especially for Labour.

Nor can I understand how strikes, or any compulsory statutory acts can permanently aid the working man. For class legislation, whether in the form of unjust land, income or property tax, impositions, or exemptions, unfair charitable aid provisions, protection of local industries, absurd bankruptcy laws, or statutes for the special advantage of Labour, must, as a natural consequence, discourage the main springs of national prosperity; and therefore be not only ruinous to general prosperity, and therefore to individual prosperity, but react disastrously Against the favoured class.

As Disraeli said upon a memorable occasion:—

"It may be in vain now in the midnight of their intoxication, to tell them that there will be an awakening of bitterness; it maybe idle now, in the springtide of their economic frenzy, to warn them that there may be an ebb of trouble. But the dark and inevitable hour will arrive. Then, when their spirit is softened by misfortune, they will recur to those principles that made England great, and which, in our belief, can alone keep England great."

Meantime, no impartial person can read the very able article by one of the leaders of Labour, Mr. H. H. Champion, in "The Nineteenth Century Review' for February last, and the reply in the March number by the Australian labour delegate, Mr. J. page 11 D. Fitzgerald, without feeling sad that Labour permits herself to be so misled by leaders who are either cruelly ignorant of her needs, or wilful traitors to her cause.

Such are some of the indications that Time, that brings all things, will bring the conviction to Labour that the idols she has worshipped, and the oracles that have deluded her, are not the true ones.

She will also find out, in respect of those leaders, that she must not contrast too strongly the hours of courtship with the years of possession.

It will be interesting to watch the result of the recent laws enacted in The Great Republic for the protection of wage-earners; especially The Weekly Payment Act in New York, and the other cognate enactments there, and in Maryland, Ohio, Virginia, Iowa, Massachusetts, Kentucky, Louisiana, Mississippi, and North Dakota. (See "The Review of Reviews," April, 1891, p. 335.)

The cure for the exodus is not, not the quack remedies intended to be applied by the Premier, viz., the putting in hand of public relief, i.e., of public plundering, works (see Hansard, 1891, second session, p. 68), or the groundless, sinister, dishonest, and otherwise vicious, and otherwise unwise Land Tax bursting up policy; but it is a cure clear and simple.

It consists in that we must, as I repeatedly, and alas! in vain urged last year prior to the election, all make common cause, and take an active part, even at this eleventh hour, in first educating aright public opinion; and then in returning such a reform phalanx of representatives to Parliament as will insure fruit, not thorns—general prosperity, not class legislation.

All must be wise men, who will insure the constitutional reforms needed, financial economy (including sweeping retrenchment), fair legislation (involving of course justice for all classes and persons alike), and wealth production.

It is only thus that confidence amongst capitalists can be restored, and immigration promoted: and thus the exodus stopped. For Capital is now so frightened that it can only be reassured by placing in power men whom it can trust.

Indeed, "The Sydney Morning Herald" says (see "The New Zealand Herald" of August 24th, 1891)

"It may be profitless to speculate on what the end of all this will be. That it will frighten capital from investment in the Colony will probably be scarcely questioned by those who are forwarding this legislation. It is obvious that no person having all the rest of the world before him from which to; choose would deliberately invest in real property, whether by purchase or mortgage, or other interest, where, it is plainly declared, such investment will be burthened with exceptional and even prohibitive burthens; and it must be that the party promoting such taxation believe that this capital can be done without, and that their individual interests can be better served by the compulsory expropriation of landowners, and the partition of their lands among the smaller holders. This is the objective point at which such legislation aires, and the results have no doubt been weighed by those who are determined to carry it through. It is a daring venture, such as no other colony has hitherto attempted. It has been generally accepted that imported capital has been the very life-blood of colonial enterprise, and that when it was withdrawn or when doubt or distrust made capital shrink within itself, industries and development and enterprise of every kind languished The party now in power in New Zealand propose to teach a different lesson to the conies; and the colonies will be content to wait and learn."

So the "Australasian Insurance and Banking Record" for September, 1891, says, referring especially to the new taxation scheme, and its relation to debentune interest:—

"Legislation of this character must tend to drive capital away from New Zealand, for, if one impost is made retrospective, what security have debenture-holders that they may not find their interest further clipped? As to the relations between companies and their British debenture-holders, it cannot be believed for an instant that, unless the contract expresses that the debenture interest is subject to New Zealand taxation, the deductions authorised by the New Zealand Government will be made. The English law courts, if appealed to, would have something to say upon the subject which would overthrow the permission given by the New Zealand Government to companies to deduct the tax, "whether coupons tor such interest have been issued with such debentures or not. If the deduction could be made, it would be pro tanto an act of repudiation. In view of the new taxation described it is idle to deny that the principle of repudiation has been recognised in New Zealand. From the attempted taxation of existing debenture-holders in companies by a retrospective provision, to an attempt to tax interest payable to public creditor, the step is easy and consistent."

My facts, arguments, and conclusions are all now before my readers.

It is clear that the cause of the exodus is ignorant apathy, and that its cure is intelligent vigour.

But I have written of all this in full detail, over and over again in "The Political Situation" ("New Zealand Herald," page 12 16th September, 1887), "The New Evangel" ("The New Zealand Herald" of July 3, July 6, August 30, September 4, September 13, and November 19, 1888; June 20, July 3, and July 8, 1889; and June 4, June 13, July 16, and August 22, 1890), and in "The Specific for Our Difficulties," and in "The Specific Platform" ("The Auckland Evening Star" of July 17, August 5, September 26, September 29, October 2, October 6, October 14, and November 15, 1890) till I am weary and disheartened; and till I am sadly convinced that it is idle to write more till we have suffered more.

In concluding, I can pen nothing more pertinent to the present situation than what I wrote in "The Auckland Star" of November 15 last, just before the election:—

"No, the crisis involving increased suffering, the consciousness of the insidious advance of despair—must first come.

"The pudding must yet be found to have fewer plums, and more suet.

"As time glides on it will make us wiser and sadder.

"Then, but not till then, we shall realise the folly of ignoring truth.

"Then, but not till then, we shall recognise that the loss of moral sanity must sooner or later entail disintegration and decay.

"Then, but not till then, we shall, like Bassanio in the play, turn from the specious casket, which contains only the death's head and the fool's head, and fix on the plain leaden chest which contains the treasure.

"Then, but not till then, after the invitable pain and patience, the present angels and demons of the multitude will change places.

"Meantime, I stand alone, but not ashamed, confident that although sound principles may be borne down for a time by senseless clamour, yet that they are strong with the strength and immortal with the immortality of truth; and that, however they may be flouted for the present, they will assuredly find appreciation at no distant date."

Democracy, in its truest principle, is not fulfilling the expectation of its early years. It must be so, so long as we prefer apathy, dishonesty, and humbug to effort, honesty, and truth—a fool's paradise—a paradise of castles in the air—not a paradise of facts.

Indeed, in any event, I fear we have sown in folly too long for our days of sorrow to be yet over; and that a much greater term of suffering must yet transpire before our sin of selfish apathy can be expected to be wiped away.

But, of course, our time of delivery will come; if we meantime cultivate sound judgment and sane action; and, above and beyond all, if we are most careful to lose no opportunity to—

Fling Out the Flag of Truth.

R. Laishley.

September, 1891.

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