=Politics in New Zealand.= By Prof. Frank Parsons. Edited by
Dr. C. F. Taylor. Dr. C. F. Taylor, Publisher, Philadelphia, Pa.
This is one of the Equity Series published quarterly by Dr. Taylor, and
contains the chief portions of the political parts of a book entitled,
“The Story of New Zealand,” by Prof. Frank Parsons and Dr. Taylor. The
latter is a large, heavy book selling at $3.00, and is doubtless the most
complete history of New Zealand and exposition of present conditions
there ever published. It is a beautifully illustrated volume containing
860 pages, and includes history, description, the native people (the
Maoris) and their treatment by the whites, the splendid resources of the
country, and, more than all, a full and interesting account of the rise
and development of the remarkable institutions and government of New
Zealand which are attracting the attention of all the rest of the world.
As Dr. Taylor well says in his explanatory note in “Politics in New
Zealand,” the size and cost of the “Story of New Zealand” prevent it from
reaching the masses of our people, and the political facts, particularly
of that progressive country should reach the mind and thought of our
voters. “It is,” he says, “with a view of placing these political facts
within the easy reach of the masses of our people, that I have selected
the most important of these facts from the large book and arranged
them as you see them in this unpretentious pamphlet.” “Politics in New
Zealand” is now being used in combination with subscriptions to WATSON’S
MAGAZINE. (See advertising pages.)
The great value of “Politics in New Zealand” lies in the fact that it
gives the workings of many Populistic ideas put into actual practice. In
this country the People’s Party has been obliged to theorize and resort
to an appeal to the reasoning faculties of the people. It has been unable
to point out many illustrations of the actual working of its theories,
except by reference to foreign countries. For example, to sustain its
contention for public ownership of railroads, it has been obliged to use
the lines in Germany and other monarchies as illustrations. The United
States is such a vast domain as compared with countries in Continental
Europe, that considerable discrimination is necessary in order to draw
a fair conclusion. Besides, the European countries are so old that the
habits of the people are a great factor not to be lightly dismissed. In
using New Zealand, however, as our object lesson, the conditions are
more, nearly parallel. It is true that country is much smaller than
the United States, but in point of age and habits of the people, there
is much similarity. Accordingly, New Zealand is without doubt the best
object lesson in the world for proving the soundness of Populistic
theories.
Those who have either bought or sold real estate in the older portions
of the United States, understand the difficulties and uncertainties
surrounding land titles under the system which is in vogue generally. As
Prof. Parsons points out, it is often necessary to search through many
big volumes of deeds and mortgages, and carefully construe the provisions
of various wills and conveyances in order to follow the title to its
source, and form an opinion as to its validity. And even then the opinion
of the most accomplished expert may prove fallacious, and the purchaser
may lose his land through some defect of title. As early as 1860 the
New Zealanders passed an act to remedy this condition of things by
establishing what is known as the Torrens system of title registration.
The owner of land may give the registrar his deeds and the claims of all
persons interested, and the registrar investigates the title once for
all. He accepts it if he finds it valid, and registers the applicant as
proprietor, giving him a certificate to that effect. The certificate
gives an indefeasible title in fee, subject only to such incumbrances and
charges as may be entered on the register. An independent purchaser has
only to consult the register to learn at once who is the owner of the
land, and what burdens, if any, rest upon it. He is not obliged to trace
the title back to the Government Patent. This system is now in force in
some places in the United States, but its adoption is generally opposed
by those who profit by examining titles—that is to say, the lawyers.
There were some telegraph lines constructed under the provincial
governments of New Zealand prior to 1865, but nothing was done in a
national way until that year. Then the General Assembly authorized the
Governor to establish electric telegraphs and appoint a commissioner
to manage them. Existing lines and offices were to be purchased, new
lines built, and a national system developed. The commissioner made
the regulations, fixed the rates, and employed operators to transmit
all messages presented. Afterward the telegraphs became a part of the
postal system. This naturally led to government ownership and operation
of the telephone when the latter means of transmitting intelligence was
introduced. It is also a part of the postal system, and as Prof. Parsons
points out, “The Government is ‘hello-girl’ as well as postmaster,
telegraph operator and banker.”
Mr. Gladstone secured the establishment of postal savings banks in
England in 1861. New Zealand adopted the idea in 1865, and since that
time nearly every country in the civilized world, except the United
States, has followed England’s example. The object of the New Zealand
Post Office Savings Bank Act (1865) was stated to be: “To give additional
facilities for the deposits of small savings at interest, and with the
security of the Government behind it.” Practically all the money order
offices in New Zealand (470 a few years ago) were open under the Postal
Banking Law for the transaction of savings bank business, while there
were but five private savings banks in the Islands. In New Zealand there
is a place of bank deposit for each 1,800 people. In the United States
there is one for each 7,650 people. The total deposits in all sorts
of banks is $110 per head of population in the United States, $125 in
Great Britain, and $140 in New Zealand. Comment seems to be unnecessary.
The postal banks will not receive less than a shilling at a time, but
printed forms are furnished on which stamps may be pasted, one or more
at a time, until the total amounts to a shilling or more, when the slip
can be deposited as cash to the amount of the stamps pasted on it. The
great advantage of postal banking, and in fact all government banking, is
its safety. No postal bank in any country has ever closed its door for
liquidation, or experienced a run on its funds.
In view of our insurance scandals and the recent investigation, the
chapter on Government Insurance is especially interesting at this time.
In 1870 New Zealand adopted the Australian ballot and a public works
policy, together with a Government Life Insurance Department. As the
author points out, “The philosophy of this new departure was very simple.
The purpose of insurance is the diffusion of loss. Instead of allowing
a loss to fall with crushing weight on one individual, or family, it is
spread out over a large number of stockholders or premium payers. If
it is a good thing to distribute loss over a few thousand people who
hold stock in a given company or pay premiums to it, it is still better
to distribute the loss over the whole community. It is also wise to
eliminate the expenses and profits of insurance so far as may be, and put
the guarantee of the Government behind it, so that it may reach as many
people and afford as much security as possible.”
The insurance department was popular from the very start. The latest
report when this book was written (1901) showed in force 42,570 policies
covering $51,000,000 of insurance, or practically half the total business
of the Colony. The Government office had beaten the private companies in
fair competition, for there was no attempt to exclude private insurance
companies. It had, in 1901, a much larger business than any of the
companies, and almost as much as all the companies put together. This
refers, of course, to the ordinary life insurance business, for there
were 21,000 policies in industrial societies, which were not included
in the regular life insurance statement. Two of our companies mixed up
in the recent scandal, the Equitable Life and the New York Life, had,
in 1901, been in the Colony 15 and 13 years respectively. The Equitable
had 717 policies in force and the New York Life 139, as against 42,570
Government policies.
The people of New Zealand prefer the Government insurance because of
its safety—it has the guarantee of the Government behind it. It is in
no danger of vanishing through insolvency, as ordinary insurance does
now and then. Because of its cheapness, the rates being lower than
any ordinary private companies; and because of its freedom from all
oppressive conditions. The only conditions are that the premiums must be
paid, and the assured must not commit suicide within six months after
the insurance is taken out. As Professor Parsons says, “The policy is
world-wide. The assured may go where he will, do what he likes—get
himself shot in battle, smoke cigarettes, drink ice-water and eat plum
pudding, or commit suicide under the ordinary forms after six months,
and the money will still be paid to his relatives.” Instead of wasting
valuable time and gray matter on devising schemes to prevent scoundrels
from looting private insurance companies, why not devote a little
thought to inaugurating a system of government insurance?
An unique institution in New Zealand is the Public Trust office,
established in 1872. Its purpose is to serve as executor, administrator,
trustee, agent, or attorney, in the settlement and management of the
property of decedents, or others, who for any reason are unable or
unwilling to care for it themselves; to insure honest administration and
safe investment; to provide for a wise discretion that may avoid the
difficulties and losses incident to a strict fulfilment of wills and
trusts imperfectly drawn; and to give advice and draw up papers, wills,
deeds, and other instruments for the people in all parts of the Colony.
“In the earlier years,” says the author, “nominations for representatives
were made and seconded vocally at an assembly of the voters of the
district. But since the Act of September (1890) representatives are
nominated by petition in writing, signed by two or more voters of the
district, transmitted with the candidates’ assent and a $50 deposit
to the returning officer, who immediately publishes the names of the
candidates. Each candidate must be nominated on a separate paper which
must be transmitted to the returning officer at least seven days before
the polling day. If the nominee doesn’t get one tenth as many votes as
the lowest successful candidate, the $50 deposit is forfeited to the
public treasury. This shuts out frivolous nominations. The nominations
are usually made some time before the voting day, and the candidates go
about the district and meet and address the electors in all parts of it.
No candidate would stand any chance of election who failed to give the
people he wished to represent an opportunity to get acquainted with him
and ask him questions about his attitude on issues likely to come before
the next Parliament. Seamen, sheep-shearers and commercial travelers are
permitted to vote by mail. Such person gets a ballot paper filled up
by the Postmaster with the names of the candidates in the applicant’s
district, and the postal voter then marks the ballot and mails it.”
Another Populistic economic theory put in practice in New Zealand is the
Land and Income Assessment Act which abolishes the personal property tax
and establishes graduated taxation on land values and incomes. The avowed
objects of the law are to tax “according to ability to pay,” “to free
the small man,” and, “to burst up monopolies”; and its cardinal features
are the exemption of improvements and of small people and the special
pressure put on the big monopolies and corporations and on absentees.
All improvements are exempt. All buildings, fencings, draining, crops,
etc.—all value that has been added by labor, all live stock also and
personal property; only the unimproved value of the land is taxed.
Mortgages are deducted also in estimating the land taxes as they are
taxed to the lender. There is a small-estate exemption of $2,500, where
the net value of the estate doesn’t exceed $7,500. So that if a farmer
has no more than $2,500 of land value left after deducting improvements
and mortgage liabilities from the value of his real property, he pays no
land tax.
Besides the three exemptions mentioned, there is another conditional
exemption. If an old or infirm person owns land or mortgages returning
less than $1,000 a year, and can show that he is not able to supplement
his income, and that the payment of the tax would be a hardship, the
commissioner may remit the tax. Here the custom is quite the other way.
The millionaire swears off his tax. Out of 110,000 land owners, in New
Zealand, only 16,000 pay tax.
The graded tax begins when the unimproved value reaches $25,000. It rises
from ¼ of a cent on the pound of $25,000 to 16⁄4ths, or 4 cents, a pound
on a million dollars, or more, of unimproved value. This graduated tax is
in addition to the ordinary level-rate land tax levied each year, which
is 2 cents on the pound. Absentee owners of large estates have still
another tax to pay. If the owner of an estate large enough to come under
the graded tax has been out of the country a year, this graded tax is
increased 20%.
The income tax applies to net income from employment, and net profits
from business. There is an absolute exemption of $1,500, except in the
case of absentees, and companies whether absentees or not, and a further
additional exemption up to $250 a year for life insurance premiums, if
the citizen wishes to spend his money that way. All income derived from
land or from mortgages, so far as they represent realty, is outside this
tax, which affects only income from employment or business. The farmer,
who derives all his income from land, pays no income tax. The same may be
said of a lawyer, doctor, teacher, artisan, or any other person who makes
no more than $1,500 a year. The total number of income-tax payers is only
about 5,600.
United States Consul Connolly, reporting to our Government in 1894 and
1897, has considerable to say regarding taxation in New Zealand. He says
that country excels in the matter of taxation. That in a very short time
the system of taxation had been revolutionized and the incidence almost
entirely changed, not only without disturbing to any appreciable extent
existing interests, but with the most beneficial results. He says the
income tax was most fiercely denounced as inquisitorial, destructive of
the first principles of frugality and thrift—in fact all the forms of
evil lurked in the shadows of the words “income tax,” and a united effort
was made to resist this “iniquitous tax,” but all to no purpose. And that
in 1897, after six years of experience, the more liberal and fair-minded
of those who opposed the income tax frankly admitted that it is a fair
and unembarrassing tax. “In New Zealand the land and income tax is now
popular; it is accepted in lieu of the property tax; it is a success.”
In the United States the Government is paternalistic toward banks,
railroads and manufacturing interests. It loans its credit to the
national bankers at most advantageous terms, but has persistently refused
to favor other classes in a similar way. In New Zealand, however, in
1894, there was established a Government loan office which lends public
funds to farmers, laborers, business men, etc. at low interest, and on
easy terms. The security taken is on freehold, or leasehold, interest
clear of incumbrances and free of any breach of conditions. The loans are
on first mortgage of land and improvements. No loan is to be less than
$125, or more than $15,000, and the sum of the advances to any one person
must not exceed $15,000. There are two kinds of advances, fixed loans
and installment loans. The first may be for any period not exceeding ten
years, and the principal is due at the end of that term. The second is
for 36½ years, and part of the principal is to be paid each half year.
Interest in both cases is at 4½%, if paid within fourteen days of the
time it is due (5% if payment is not prompt); and in the case of an
instalment loan, 1% more is to be paid for the reduction of the principal.
Passing over the chapters devoted to the labor department, the state
farm, the factory laws, the shop acts, the 8-hour day, industrial
arbitration and co-operation, all of which are of intense interest,
but of such a nature as to preclude brief statement, we come to the
Government ownership and operation of the railways. The year 1894 Prof.
Parsons calls “the glory year of land resumption. Government loans to
farmers, nationalization of credit, labor legislation and judicialization
of strikes and lock-outs.” It was in this year that another important
move was made through a vital change in the national railway policy. In
1887 a commission system was inaugurated, under which the roads were
put in the hands of commissioners appointed by the Governor, with the
assent of Parliament. This did not prove satisfactory to New Zealand. The
commissioners managed the roads with a view to making a good financial
report. They were looking for profit. In the Parliamentary debates it
was charged that rates were so high that firewood went to waste in the
forest, and potatoes rotted in the fields, while the people in the
cities were cold and hungry in the years of depression; that goods were
frequently hauled more cheaply by wagon than by rail; that while rates
were reduced somewhat now and then, it was done by reducing wages; that
the pay of the men was cut while the salaries of high-priced officials
were increased, and so on. This is a striking parallel to conditions in
the United States today.
Prof. Parsons admits that the commissioners were honest, but they
were simply railroad men, running the roads to make money for the
treasury. Finally public indignation became intense. The air was full
of complaints, and in 1893 the abolition of the commission was made an
issue in the campaign, and the people, by an overwhelming majority,
elected representatives pledged to put the roads under direct control of
the Minister of Railways and the Parliament, and to bring the railroads
within speaking distance of the people.
The result of this change is that the roads are no longer run primarily
for profit, but for service; and the men are treated with the
consideration due to partners in the business. It is announced that the
definite policy of the Government shall be that all profits above the 3%
needed for interest on the railway debt shall be returned to the people
in lower rates and better accommodations. This is in striking contrast to
the facts brought out in the letter of Engineer William D. Marks to Hon.
Wharton Barker, recently printed as a public document at the instance of
Senator Tillman of South Carolina, in which it is shown that the people
of the United States are today paying interest on a fictitious railway
capitalization of something like $7,000,000,000.
In 1899 the Minister of Railways announced a reduction of 20% on ordinary
farm products and 40% on butter and cheese, etc. These concessions, Prof.
Parsons declares, amount to one seventh of the receipts—equivalent to
a reduction of $150,000,000 on the yearly freight rates in the United
States. That alone would be a yearly saving of almost $2 a head for
the people of the United States. In 1900 Mr. Ward, the new Minister of
Railways, announced a general lowering of passenger fares as the first
fruits of his administration. “The announcement was received with cheers
by the audience—stockholders in the road.” Care is taken in New Zealand
that small men shall not be put at a disadvantage. The State roads carry
400 pounds at the same rate as the ton rate, or the train-load rate, and
one bale of wool goes the same rate as a thousand. No such thing is known
in New Zealand as the lowering of rates to a shipper because of the great
size of his shipments. All the rates are made by the management openly.
There are no secret modifications of the tariff. There may be a variation
on scheduled rates to equalize a long haul, or enable a distant mine or
factory to reach the market in condition to compete with nearer rivals,
but the total charge is never lower than the rate that is given to others
for the same service.
The State roads are used to advance the cause of education. Children in
the primary grades are carried free to school. Other children pay $2.50
to $5, according to age, for a three-months season ticket up to sixty
miles. This gives them a possible 120 miles a day for 3 to 6 cents in
round numbers, or 20 to 40 miles for a cent. A child who goes in and out
six miles each day rides 12 miles for 3 cents.
It is impossible in the limits of this article to more than touch upon
many of the other advances made in New Zealand. The Referendum is now
used to a considerable extent in local affairs, and its use is being
extended. Old age pensions are in force, being a much better method than
maintaining poor houses. Immigration is carefully guarded. The State is
now opening coal mines and engaging in the business of furnishing fuel to
the people. Many other innovations of this character are being considered
and put in operation from time to time.
Prof. Parsons summarizes his study of New Zealand in some sharp contrasts
and conclusions, from which we quote in part:
“The United States is in form a Republic, but ... an aristocracy of
industrial power. New Zealand is in form an Imperial Province, but in
fact it is substantially a Republic. The will of the great body of the
common people is in actual control of the Government.
“In America, farmers organize for agricultural needs, and the working-men
organize for labor purposes, but they do not join forces to take control
of the Government in their common interest, as is the case in New
Zealand. Not only have our farmers and workers failed to get together,
but neither group has learned to use the ballot for its interest in any
systematic way. The farmers divide at the polls and organized labor
divides at the polls. In New Zealand the small farmers are practically
solid at the ballot box, and organized labor is solid at the ballot, and
the two solids are welded together into one irresistible solid.”