PUBLIC FINANCE (1893-1898).
Sir Hugh Nelson at the Treasury.--Credit of Colony Restored.
--Assistance to Financial Institutions and Primary Industries.
--Savings Bank Stock Act.--Public Debt Reduction Fund.
--Treasurer's Cautious and Prudent Administration.--Money
Obtained in London at a Record Price.
When the banking crisis occurred in 1893, Mr. (afterwards Sir) Hugh
Nelson, who had previously held office with distinction as Railway
Minister for about two years, reluctantly took charge of the
embarrassed Treasury. Entering Parliament after the general election
in 1883, he had from the first given evidence of more than common
knowledge of public finance. Mr. Nelson was an exceedingly modest man,
and an indifferent public speaker at best; but he possessed courage,
thoroughness, and scholarly knowledge. In public matters he always
aimed at taking the line of least resistance; but knowing what he knew
in March, 1893, his assumption of office as Treasurer must be regarded
as an act of heroism dictated by regard for the public welfare.
Quietly and unobtrusively he worked, refusing all invitations
to appear on public platforms, and while affecting contempt for
politicians who constantly apostrophised "the people," he determined
to set the affairs of the colony straight. Revenue at that time had
almost touched bottom, and was very inelastic; and Mr. Nelson followed
the example of his immediate predecessor in keeping a tight hand upon
expenditure. For 1892-3 there had been a reduction of outlay of about
L70,000 only, as compared with the preceding year, the June deficit
having been reduced to L111,676; but in the next year he realised
rather less revenue, yet reduced expenditure by L206,000, closing the
year with a small deficit of L8,467. As this was the time in which
most commercial and financial disaster was suffered from the crisis,
this economy was a feat worth accomplishing, although the drastic
reduction of expenditure tended to aggravate the crisis by delaying
the restoration of confidence. After 1893-4 followed six surpluses.
In the midst of the bank reconstructions of 1893 there had been a
general election, and Parliament met on 25th May. Between then
and 18th October, 1893, Mr. Nelson, as Treasurer in the McIlwraith
Ministry, passed those financial measures which were the greatest
achievements of his career. An unpopular measure was his Civil Service
Special Retrenchment Act, but it was imperative, and civil servants
were indeed fortunate, when so large a number of their friends
in private life were left destitute, in being able to draw their
diminished salaries month by month. The Queensland National Bank
Limited Agreement Act enabled that institution to resume business,
though the public sacrifice was great. Acts were also passed for
encouraging meat and dairy works; for advancing guaranteed loans by
the Treasury to sugar works companies; for Treasury advances upon the
notes of suspended joint stock banks; for the issue of Treasury notes,
made legal tender throughout the colony save by the Treasury; and
for the imposition of a yearly tax of 10 per cent. on notes issued
by banks. In the same session was passed an Act for giving relief to
public depositors, such as treasurers of hospitals and other public
institutions, by making Treasury advances upon the amount of their
locked-up deposits.
Another important measure of this period was the Government Savings
Bank Stock Act of 1894, under which any savings bank depositor may
exchange his deposit for L10, or any multiple thereof, of Government
stock redeemable in 1945, and bearing not more than 31/2 per cent.
interest. In 1897 the amount of such stock issuable was increased
from L1,000,000 to L2,000,000. The object of this measure was to give
depositors the opportunity of making investments in small amounts of
Government stock, for which there would always be a buoyant market in
the event of cash being required; and also to safeguard the Treasury
by reducing the amount of money held on account of savings bank
deposits repayable at call. In 1897 the total deposits did not exceed
21/2 millions; to-day they total over 5 millions. It is therefore
satisfactory to note that the Treasurer (Mr. Hawthorn) early in the
current year made arrangements for enlarging the sale of savings bank
stock in the manner intended by the author of the Act.
In 1895 Mr. Nelson passed the amended Audit Act under which, if it
appears by the Treasurer's annual statement that there is a surplus of
receipts for any financial year, the money shall, before the 31st
day of December following, be paid to the trustees of the Public Debt
Reduction Fund created by the Act, and by them applied, first to the
purchase of Treasury bills, and then to the purchase of inscribed
stock at the current market price, stock so purchased to be cancelled.
As a Treasurer with a deficit is bound to make provision for its
liquidation at the end of a financial year, the effect of the Act
has been to start every year with a clean sheet. By this practice an
ingenious Treasurer is deprived of the opportunity of juggling with
accumulated surpluses.
[Illustration: ON THE ROAD TO MARKET, CENTRAL QUEENSLAND]
[Illustration: FAT CATTLE, CENTRAL QUEENSLAND]
In April, 1898, when Sir Hugh Nelson retired from active politics, he
had just completed five years' service as Treasurer. During that time
he had gone to the London money market only twice, and had issued
stock to the amount of only 33/4 millions. Of that sum, moreover, the
2 millions asked for in 1894 was for retiring Treasury bills, and for
the liquidation of the deficit on account of previously issued loans.
In 1896 the Loan Act totalled L2,324,480, though it was not all placed
by Sir Hugh Nelson. It provided for further railway extensions, and
included half a million sterling for loans in terms of the Local Works
Loans Act under the Sugar Works Guarantee Act; L600,000 was applied to
the purchase at par of savings bank stock for cancellation, only 11/2
millions being placed on the London market. Of these two loans issued
subsequent to the 1893 crisis, the first, bearing 31/2 per cent.
interest, realised L98 14s. 01/4d. net per L100 of stock, and the other,
floated in 1897, bearing 3 per cent., brought L95 15s. 103/4d., the
record price for money obtained by the issue of Queensland Government
stock in London.