"Members the Treasurer pressing to mob;
Provinces urging the annual job;
Districts whose motto is cash or commotion;
Counties with thirsts which would drink up an ocean;
These be the horse-leech's children which cry,
'Wanted, Expenditure!' I must supply."
- The Premier's Puzzle.
Sir George Grey had been curtly recalled in the early part of 1868. His friends may fairly claim that at the time of his departure the Colony was at peace, and that he left it bearing with him the general esteem of the colonists. True, his second term of office had been in some ways the antithesis of his first. He had failed to prevent war, and had made mistakes. But from amid a chaos of confusion and recrimination, four things stand out clearly: (1) he came upon the scene too late; (2) he worked earnestly for peace for two years; (3) the part that he personally took in the war was strikingly successful; (4) he was scurvily treated by the Colonial Office.
He was the last Viceroy who took an active and distinct share in the government of the country. Since 1868, the Governors have been strictly constitutional representatives of a constitutional Sovereign. They have been without exception honourable and courteous noblemen or gentlemen. They have almost always left the Colony with the good wishes of all with whom they have come into contact. They have occasionally by tact exercised a good deal of indirect influence over some of their Ministers. They have sometimes differed with these about such points as nominations to the Upper House, or have now and then reserved bills for the consideration of the Home Government. But they have not governed the country, which, since 1868, has enjoyed as complete self-government as the constitution broadly interpreted can permit.
When peace at last gave the Colonists time to look round, the constitution which Grey and Wakefield had helped to draw up was still working. Not without friction, however. Under the provincial system New Zealand was rather a federation of small settlements than a unified colony. This was in accord with natural conditions, and with certain amendments the system might have worked exceedingly well. But no real attempt was ever made to amend it. Its vices were chiefly financial. The inequalities and jealousies caused by the rich landed estate of the southern provinces bred ill-feeling all round. The irregular grants doled out by the Treasurer to the needier localities embarrassed the giver without satisfying the recipients. The provinces without land revenue looked with hungry eyes at those which had it. There was quarrelling, too, within each little provincial circle. The elective superintendents were wont to make large promises and shadow forth policies at the hustings. Then when elected they often found these views by no means in accord with those of their council and their executive. Yet, but for one great blunder, the provinces should and probably would have existed now.
1870 is usually named as the birth-year of the colonial policy of borrowing and public works. This is not strictly true. In that year the central and provincial exchequers already owed about seven millions and a quarter between them. The provincial debts, at any rate, had been largely contracted in carrying out colonizing work, and some of that work had been exceedingly well done, especially in Canterbury and Otago. What the Central Government did do in 1870 was to come forward boldly with a large and continuous policy of public works and immigration based on borrowed money. The scheme was Sir Julius Vogel's. As a politician this gentleman may not unfairly be defined as an imaginative materialist and an Imperialist of the school of which Cecil Rhodes is the best-known colonial exponent. His grasp of finance, sanguine, kindly nature, quick constructive faculty, and peculiarly persuasive manner rapidly brought him to the front in New Zealand, in the face of personal and racial prejudice. As Treasurer in 1870 he proposed to borrow ten millions to be expended on railways, roads, land purchase, immigration, and land settlement. With great wisdom he suggested that the cost of the railways should be recouped from a public estate created out of the crown lands through which they might pass. With striking unwisdom the Provincialists defeated the proposal. This selfish mistake enabled them to keep their land for five years longer, but it spoilt the public works policy and converted Vogel from the friend into the enemy of the Provinces.
His policy, minus the essential part relating to land settlement, was accepted and actively carried out. Millions were borrowed, hundreds of miles of railways and roads were made, immigrants were imported by the State or poured in of their own accord. Moreover, the price of wool had risen, and wheat, too, sometimes yielded enormous profits. Farmers were known who bought open land on the downs or plains of the South Island at L2 an acre, and within twelve months thereafter made a net profit of L5 an acre from their first wheat crop. Labour-saving machinery from the United States came in to embolden the growers of cereals; the export of wheat rose to millions of bushels; and the droning hum of the steam threshing-machine and the whir of the reaper-and-binder began to be heard in a thousand fields from northern Canterbury to Southland. In the north McLean steadfastly kept the peace, and the Colony bade fair to become rich by leaps and bounds. The modern community has perhaps yet to be found which can bear sudden prosperity coolly. New Zealand in the seventies certainly did not. Good prices and the rapid opening up of the country raised the value of land. Acute men quickly bought fertile or well-situated blocks and sold them at an attractive profit. So men less acute began to buy pieces less fertile and not so well situated. Pastoral tenants pushed on the process of turning their leaseholds into freeholds. So rapid did the buying become that it grew to be a feverish rush of men all anxious to secure some land before it had all gone. Of course much of this buying was speculative, and much was done with borrowed money. The fever was hottest in Canterbury, where the Wakefield system of free selection without limit as to area or condition as to occupation, and with the fixed price of L2 an acre, interposed less than no check at all to the speculators. Hundreds of thousands of acres were bought each year. The revenue of the Provincial Council rose to half a million; the country road-boards hardly knew how to spend their money. Speculation, extravagance, reaction - such were the fruits the last years of Wakefield's system bore there. Not that the fault was Gibbon Wakefield's. It rests with the men who could not see that his system, like every other devised for a special purpose, wanted to be gradually changed along with the gradual change of surrounding circumstances.
The southern land revenue, thus swollen, was a glittering temptation to politicians at Wellington. As early as 1874 it was clear that more colonial revenue would be wanted to pay the interest on the growing public debt. Vogel decided to appeal to the old Centralist party and overthrow the Provinces. Their hour was come. The pastoral tenants nearly everywhere disliked the democratic note growing louder in some of them. New settlers were overspreading the country, and to the new settlers the Provincial Councils seemed cumbrous and needless. Fresh from Great Britain and with the ordinary British contempt for the institutions of a small community, they thought it ridiculous that a colony with less than half a million of people should want nine Governments in addition to its central authority. The procedure of the Provincial Councils, where Mr. Speaker took the chair daily and a mace was gravely laid on the table by the clerk, seemed a Lilliputian burlesque of the great Mother of Parliaments at Westminster.
Nevertheless, the Provinces did not fall without a struggle. In both Otago and Auckland the older colonists mostly clung to their local autonomy. Moreover, Sir George Grey had taken up his abode in the Colony, and was living quietly in an islet which he owned near Auckland. Coming out of his retirement, he threw himself into the fight, and on the platform spoke with an eloquence that took his audiences by storm, all the more because few had suspected him of possessing it. Keen was the fight; Major Atkinson, quondam militia officer of Taranaki, made his mark therein and rose at a bound to take command of the Centralists; the Provincialists were fairly beaten; the land passed to the Central Government. The management of local affairs was minutely subdivided and handed over to some hundreds of boards and councils which vary a good deal in efficiency, though most of them do their special work fairly enough on accepted lines.
Though colonists join in complaining of the number of these no serious attempt has, however, been yet made to amalgamate them, much less to revive any form of Provincialism. Municipal enterprise has made few attempts in New Zealand to follow, however humbly, in the wake of the great urban councils of England and Scotland. Water companies indeed are unknown, but most of the towns depend upon contractors for their supplies of light; municipal fire insurance is only just being talked of; recreation grounds are fairly plentiful, but are not by any means always managed by the municipality of the place. None of the town councils do anything for the education of the people, and but few think of their entertainment. The rural county councils and road boards concern themselves almost solely with road-making and bridge-building. The control of hospitals and charitable aid, though entirely a public function not left in any way to private bounty, is entrusted to distinct boards. Indeed, the minute subdivision of local administration has been carried to extreme lengths in New Zealand, where the hundreds of petty local bodies, each with its functions, officers, and circle of friends and enemies, are so many stumbling-blocks to thorough - going amalgamation and rearrangement. In New Zealand the English conditions are reversed; the municipal lags far behind the central authority on the path of experiment. This is no doubt due, at least in part, to the difference in the respective franchises. The New Zealand ratepayers' franchise is more restricted than that under which the English councils are elected.
A few words will be in place here about the continuance and outcome of the Public Works policy. Sir Julius Vogel quitted the Colony in 1876, but borrowing for public works did not cease. It has not yet ceased, though it has slackened at times. In 1879 a commercial depression overtook the Colony. The good prices of wool and wheat sank lower and lower; the output of gold, too, had greatly gone down. There had been far too much private borrowing to buy land or to set up or extend commercial enterprises. The rates of interest had often been exorbitant. Then there happened on a small scale what happened in Victoria on a larger scale twelve years later. The boom burst amid much suffering and repentance. In some districts three-fourths of the prominent colonists were ruined, for the price of rural produce continued on the whole to fall relentlessly year after year until 1894. The men who had burdened themselves with land, bought wholly or largely with borrowed money, nearly all went down. Some were ruined quickly, others struggled on in financial agony for a decade or more. Then when the individual debtors had been squeezed dry the turn of their mortgagees came. Some of these were left with masses of unsalable property on their hands. At last, in 1894, the directors of the bank which was the greatest of the mortgagees - the Bank of New Zealand - had to come to the Government of the day to be saved from instant bankruptcy. In 1895 an Act was passed which, while guaranteeing the bank, virtually placed it beneath State control, under which it seems likely gradually to get clear of its entanglements. This was the last episode in the long drama of inflation and depression which was played out in New Zealand between 1870 and 1895. No story of the Colony, however brief, can pretend to be complete which does not refer to this. The blame of it is usually laid upon the public works policy. The money borrowed and spent by the Treasury is often spoken of as having been wasted in political jobs, and as having led to nothing except parliamentary corruption and an eternal burden of indebtedness and taxation. This is but true to a very limited extent. It was not the public borrowing of the Colony, but the private debts of the colonists, which, following the extraordinary fall in the prices of their raw products between 1873 and 1895, plunged so many thousands into disaster. Nine-tenths of the money publicly borrowed by the Colony has been very well spent. No doubt the annual distribution of large sums through the Lands and Public Works departments year after year have had disagreeable effects on public life. In every Parliament certain members are to be pointed out - usually from half-settled districts - who hang on to the Ministry's skirts for what they can get for their electorates. The jesting lines at the head of this chapter advert to these. But they must not be taken too seriously. It would be better if the purposes for which votes of borrowed money are designed were scrutinized by a board of experts, or at least a strong committee of members. It would be better still if loans had to be specially authorized by the taxpayers. But when the worst is said that can be said of the public works policy, its good deeds still outweigh its evil. It is true that between 1870 and 1898 the public debt has been multiplied six times; but the white population has nearly tripled, the exports have more than doubled, and the imports increased by 75 per cent. Moreover, of the exports at the time when the public works policy was initiated, about half were represented by gold, which now represents but a tenth of the Colony's exports. Again, the product of the workshops and factories of the Colony are now estimated at above ten millions annually, most of which is consumed in New Zealand, and therefore does not figure in the exports. The income of the bread-winners in the Colony and the wealth of the people per head, are now nearly the highest in the world. In 1870 the colonists were without the conveniences and in many cases comforts of modern civilization. They had scarcely any railways, few telegraphs, insufficient roads, bridges and harbours. Education was not universal, and the want of recreation and human society was so great as to lead notoriously to drunkenness and course debauchery. New Zealand is now a pleasant and highly civilized country. That she has become so in the last thirty years is due chiefly to the much-criticised public works policy.
Before parting with the subject of finance, it should be noted that in 1870 the Treasury was glad to borrow at slightly over five per cent. Now it can borrow at three. The fall in the rate of private loans has been even more remarkable. Mortgagors can now borrow at five per cent. who in 1870 might have had to pay nine. This steady fall in interest, coupled with the generally reproductive nature of the public works expenditure, should not be overlooked by those who are appalled by the magnitude of the colonial debts. For the rest, there is no repudiation party in New Zealand, nor is there likely to be any. The growth of the Colony's debt is not a matter which need give its creditors the slightest uneasiness, though no doubt it is something which the New Zealand taxpayers themselves should and will watch with the greatest care. It is quite possible that some special check will ultimately be adopted by these to ensure peculiar caution and delay in dealing with Parliamentary Loan Bills. It may be that some application of the "referendum" may, in this particular instance, be found advisable, inasmuch as the Upper House of the New Zealand Parliament, active as it is in checking general legislation, may not amend, and in practice does not reject, loan bills.