IV.—Colonial Debt, its Outlay and Comparative Pressure.

Table II contains a full statement of the public debt, including loans raised by the provinces, together with the annual charge for interest and sinking fund to 30th June, 1876, to which is added a loan for 1,250,000l., raised in London in July last. The particulars are as follow:— page 7

	£
Total debt for which debentures and treasury bills have been issued	18,734,761
Floating debt or liabilities, 30th June, 1876	808,433
As per financial statement 30th June, 1876	19,543,194

The floating debt of 800,000l. is covered by the like amount, being the balance of loan guaranteed by the British Government, which remains at the disposal of the colonial treasurer, not having been yet issued to the public.

The annual charge for interest and sinking fund on debentures and treasury bills issued, amounts to 1,015,779l., irrespective of floating debt, which at 5 per cent, would increase the annual charge to 1,056,201l.

The population on 31st December, 1875, was 375, 856, to which must be added for six months ending 30th June, 1876, on the average of three preceding years, say 16,000, making a total population of 391,856. This is inclusive of 4,800 Chinese, but exclusive of 45,470 Maoris, according to census, 1st March, 1874. The latter contribute largely to the revenue through the customs, and many of them are wealthy; It will be quite safe, therefore, to estimate the whole as equal to a European population of 400,000, and the following calculations are worked out on that basis.

These data give a total debt of 48l. 17s. 2d. per bead, and an annual charge of 2l. 12s. 9d. per head. It is to be observed, however, that the sum accrued on the sinking fund to 30th June, 1876, amounted to 1,206,331l., which in reality reduced the public debt to the sum of 18,336,863l., or 45l. 16s. 10d. per head of population.

The sinking fund, with interest thereon as it accrues, is invested in the hands of trustees, specially for the redemption of the various loans to which it appertains;

The year 1869, as I have said, was a time of the deepest gloom in the colony. The Imperial Government bad withdrawn from all participation in the war, and there were those who feared that the colonists in the middle or south island might be tempted to follow their example, as the war existed only in the north island. The catastrophe which must have ensued, in such an event, was averted, in the first place by the better success which began to attend the war, and finally by the financial policy which was brought forward in 1870. It was thereby proposed to raise loans to the amount of ten millions, to be expended in developing the resources of the colony by means of immigration, railways, roads, and other public works. This policy was adopted with general enthusiasm, and as I shall have occasion to show, it has so far been attended page 8 with extraordinary success. It has been the means of completely pacifying the natives. It has indissolubly knit together the north and south islands, and has laid broad and deep the foundations of solid prosperity hereafter.

I shall presently comment in detail on some of the foregoing items.

There can be no doubt that this expenditure, however desirable and beneficial it may ultimately prove, has nevertheless been pushed forward too quickly. The original intention in 1870 was to raise 10 millions sterling, to be expended in the course of ten years; and a general system of trunk railways and roads was then laid down. But these plans have not been adhered to, swing, I believe, chiefly if not altogether to the pressure of the provincial Governments; the railways were in consequence commenced fractionally and not upon a general system. The colony has thus been committed to an amount of railway expenditure at once, which it would have been more judicious to spread over a period at least twice as long; so that instead of a number of lines all under construction at the same time, according to the demands of the various provinces, they might have been finished successively, and each as completed have yielded a return. According to the page 9 latest returns, there are at present no less than twelve lines in course of construction throughout the colony, besides eight more under survey.

The provincial Governments and legislatures were the means by which New Zealand was colonised simultaneously at various points, instead of spreading from one centre; and were doubtless beneficial in the early days of the colony in developing local works and attracting immigrants, and this at a time when there was little communication between the provinces; but for many years their influence has been mischievous, owing to constant conflict with the central Government, especially on points of finance; each province spending in excess of income and scrambling for its share of public loans, as well as contending for local interests in the narrowest spirit, and by means of caballing, or "log rolling," putting a pressure on the general Government, which the latter could not always resist. The consequence has been the same with all public works as with railways, that too much expenditure has been undertaken at a time, and the necessity of continual borrowing has arisen, to some extent affecting the credit of the colony. It is satisfactory, therefore, to know that this unfortunate state of affairs has been terminated by the abolition of the provincial legislatures, so that the finances, public lands, and public works, together with the entire administration of the colony, will be carried on by one central Government; while purely local affairs will be managed by municipal and county authorities.

Whatever may have been the cause, the fact, however, remains that the debt of New Zealand stood thus, excluding floating debt in either case :—

But the pressure of the public debt on a community is not to be estimated by the simple process of counting heads. Regard must also be had to the wealth and resources of the population. It would be easy to give examples in support of this proposition; but it will be sufficient for my purpose to cite the experience of the United Kingdom, by contrasting the debt after the close of the great war, or say the year 1817 with 1876:—

No one can doubt that with our increased wealth and resources we could now bear a debt of 42l. 8s. 9d. per head with a charge of 1l. 12s. 4d. per head, much more easily than our predecessors did in 1817; nor would it hinder our progress any more than it did theirs. The enormous growth of our national debt was, moreover, occasioned entirely by war expenditure, whereas, as has been shown above, a large proportion of the debt of New Zealand exists in the form of reproductive works; besides which, there are other discrepancies between the national and colonial debts. Consideration is also due to the fact that our national debt was borrowed at home, whereas the New Zealand loans have been raised in the United Kingdom.

But both these results are confessedly "founded on estimates and "calculations based on the best available data, and are only stated "as probable approximations." Nevertheless we are not without the means of instituting trustworthy comparisons as to the well being of the New Zealanders.

So far, indeed, as the working classes are concerned, an examination of Table III as to wages and the cost of living, will show that they are much better off than at home, as the wages are higher in the colony, while the cost of provisions is less.

Again, it may be safely inferred that the aggregate income of the colonists is more per head than in the United Kingdom, from the fact that the proportion of bread winners to the total population is greater—the proportion of males is 57 per cent. as against page 11 49 per cent, at home; the proportion of men in the prime of life is much greater in the colony, and there are no paupers.

The produce exported from the colony will form another test, as the exports in one form or another, whether as wages, profits, or rent, constitute a definite proportion of the income of the entire population, and the exports moreover furnish the means by which necessaries and supplies of all sorts are procured from other countries. The following table shows the average exports of produce for eight years, ending 1874, from the undermentioned colonies:—

Daring the same period the exports from Canada (Quebec aid Ontario) have averaged 11,764,130l., or 4l. per head, and the average exports of British produce from the United Kingdom was 215,528,281l., or 6l. 17s. 5d. per head.

So that in point of fact the public debt of the colony is amply covered by sound public assets, independently altogether of the ordinary taxable resources of the community, which for its numbers is one of the wealthiest and most thriving in the world.

I shall now proceed to examine the progress of New Zealand in population, revenue, expenditure, and the main branches of industry, in order to form a conclusion as to whether the increase of the debt since 1870 is likely to retard the prospects of the colony, admitting freely that the expenditure has for the time been excessive.

In stating the increase which has taken place under the different heads during the ten years ending 1875,I have, except where otherwise mentioned, taken the average of the first two years of the decade and compared them with the average of the last two years, so as to avoid error from exceptional years. I have also contrasted the first five years with the last five years of the decade.