State Socialism in New Zealand

STATE SOCIALISM IN NEW ZEALAND BY JAMES EDWARD LE ROSSIGNOL PEOFESSOK OF ECONOMICS IN THE TINIVERSITT Or DENVER AND WILLIAM DOWNIE STEWART BABBISTEK-AT-LAW, DUNEDIN, NEW ZEALAND NEW YORK THOMAS Y. CROWELL & COMPANY PUBLISHERS CotTttlGHT, 1910, By THOMAS Y. CROWELL & CO. Published November, 1910. TO HENRY AUGUSTUS BUCHTEL CHANCELLOR OF THE UNIVERSITY OF DENVER SOMETIME GOVERNOR OF COLORADO PREFACE In giving a critical account of some phases of state activity in New Zealand, we have kept in mind the point of view of the foreign observer and that of the citizen of the Dominion who takes part in the discussion of public affairs. From the former point of view it is desirable that the workings of the various social experiments should be shown as they are, without exaggeration or concealment, if anything is to be learned of their suc- cess or failure, or any knowledge obtained that might be used in the cause of social reform in other countries. From the latter point of view nothing is more important than the active discussion of public questions, for it is by this means that the conflict of interests results in compromise and legislation. But it is not enough to make a law and create a governmental department, for a department is no more to be trusted than a private corporation, and the struggle for good government must go on all the time, if abuses are to be corrected and the liberties of the people to be preserved. It is well that members of Parliament and editors give time and thought to public questions; but manu- facturers and merchants, farmers and labourers, and all the other classes must do the same, that no one set of interests be allowed to dominate the rest, and that all may work together for the common weal. In New Zealand, as elsewhere, most of the people are busy earn- ing a living, and their leisure time is given to amusements of one kind and another, but there is an increasing number of good citizens who study the questions of the day, VIU PREFACE help to form public opinion and make democratic government possible. Still more might be accomplished if it were fully realized that the chief work of the schools and colleges is the training of citizens, and that the most important studies, after the elementary branches, are the new humanities: history, politics, economics, and soci- ology. The chief authorities used in the preparation of this book have been government reports, parliamentary debates, and newspapers. Of the government reports, the most important are the excellent Year-Books, con- taining an enormous amount of information, and giving a fine statistical history from the year 1892. The best discussions of public questions are to be found in the Parliamentary Debates, and the newspapers also are very good, giving reliable news and excellent editorial articles. Of secondary authorities, by far the best are the admir- able works of Mr. Reeves. The works of Lloyd and Par- sons contain much information and interesting comment. The recent book by Mr. Scholefield is the best narrative of the industrial development of New Zealand that has yet been published. There is a conspicuous lack of monographs on special topics, although there is a vast, undeveloped field of research for University students and other investigators. The subject of industrial arbitration, however, has been carefully studied, and the works of Pigou, Gilman, Knoop, Clark, Broadhead, and Aves are especially valuable. We desire to thank all those who have helped us in the preparation of this book, especially the Hon. Sir Robert Stout, the Hon. George Fowlds, the Hon. J. A. Millar, Consul-General William A. Prickitt, Professor Ernest Rutherford, Professor Frederick Douglas Brown, Mr. J. P. Grossman, Mr. Samuel Vaile, Mr. John MacGregor, PREFACE ix Mr. Edward Tregear, Mr. E. J. von Dadelszen, and Mrs. Hastings Bridge. Particular thanks are due to Professor James Hight, of Canterbury College, who has read several of the chapters in manuscript and has made a number of valuable suggestions. J. E. LE ROSSIGNOL. W. D. STEWART. CONTENTS CHAPTER PAGE I. The Functions of Government .... 1 II. Land Tentiee 20 III. Land Monopoly 34 IV. Roads and Railways 62 V. Railway Finance 68 VI. The Pcblic Debt 9i Vn. The Land and Income Tax 117 Vlll. Local Taxation of Land 138 IX. State Life Insueance 153 X. State Fire Insubancb 167 XI. Old Age Pensions 179 XII. The Public Service 197 Xni. The Arbitration Act 216 XIV. Compulsory Arbitration in Theory and Practice 238 XV. Strikes 250 XVI. Wages and Cost of Living 269 XVII. General Survey and Estimate of Results . 284 Index S07 NORTH ISLAND OF ' NE'/V ZEALAND SCALE OF MILES 50 100 lEiO 1 I I I I I— RAILWAYS SOUTH ISLAND OF NEW ZEALAND SCALE OF MILES q M RAILWAYS STATE SOCIALISM IN NEW ZEALAND CHAPTER I THE FUNCTIONS OF GOVERNMENT Abotjt the middle of the nineteenth century, in the heyday of the Manchester School, when political economy was a science and free trade a gospel, it was common for writers on political The Policeman questions to propound theories of gov- Theory ernmental functions, to assign limits to the sphere of governmental activity, to say to the State: " Hitherto shalt thou come, but no further." Buckle, writing in 1858, said: " To maintain order, to prevent the strong from oppressing the weak, and to adopt certain precEiutions respecting the public health are the only services which any government can render to the interests of civilization." (" History of Civilization in England," vol. I, ch. 5.) To a New Zealander of the present generation the words of Buckle sound like a voice from the tomb, and even the most individualistic American must be inclined to wonder why the State, like a policeman on his beat, should be confined to this narrow round of duties. Now- adays, the student of social evolution is less dogmatic in his tone and less inclined to indulge in sweeping generalizations. He is well satisfied if he can in a measure account for the appearance of social phenomena, describe and analyze their salient features, and arrive at some 2 STATE SOCIALISM IN NEW ZEALAND conclusions, more or less dubious, as to their apparent effects. It is not easy to explain the causes which brought about the multifarious activities of the New Zealand Government. The settlers were chiefly Origin of Stat eEnglish, Scotch and Irish, like those Activities of British America in the early days, and at the present time the canny Scot of Montreal and Pittsburg feels perfectly at home in Dune- din, the Canadian of Halifax and Toronto finds congenial friends in Auckland and Christchurch, and the American of New York can talk business and politics on an equal footing with the citizen of Wellington, even though they may not see eye to eye on all political and industrial questions. Since there is no essential difference between the New Zealander, on the one hand, and the Anglo-Saxon of the United States or Canada, on the other, the difference in regard to governmental functions must be due to differences in environment rather than in the character of the people. Perhaps the early settlers, many of whom were brought out by the New Zealand Company and other associations, from 1840 onwards, had a sense of depend- ence which made them look to the Company, and, after- wards, to the State, to do things for them which the American settlers, unwilling to be taxed and unable to borrow, had to do for themselves. (Clark, " The Labour Movement in Australasia," pp. 34-39.) And yet the settlers were, as a rule, enterprising and self-reliant people, the provinces were small and governed by the leading men, and the work of the provincial councils was the work of the settlers themselves, doing by means of associated activity what could not be done so well by individual effort. THE FUNCTIONS OF GOVERNMENT 3 Indeed, for a number of years the provinces did not differ much from other colonies in regard to governmental enterprise. They administered the Crown lands, built roads, maintained Crown Lands schools, had their own police, and, although subject to the authority of the General Assembly, they carried on governments quite similar to those of the states of the Union or the provinces of Canada. The essential feature of the situation was that the provinces held and administered the Crown lands, and, like other landlords, were expected to make roads and otherwise improve their estates (Reeves, " State Experiments in Australasia and New Zealand," vol. I, p. 62). The settlers expected a good deal of such improvement, since the land was not given away, but sold at prices ranging from 55. ($1.25) an acre in Auckland to £2 ($10) an acre in Canterbury. From the making of roads the provinces naturally passed to the building of railways. Railways, as well as roads, were needed for the development of the country, and yet they were Roads and not promising forms of investment for Railways private capital. Colonial capital was profitably employed in the exploitation of land and the commerce in wool, and British syndicates could not have been induced to build railways without large grants of land, which the people were unwilling to give. Only one course remained,— the provinces must borrow money and build railways themselves, and this they did. The first railway was begun by the Province of Canterbury in the year i860, and in 1876, when the provinces were abolished, there were about 70 miles of open line to be taken over by the general Government.

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