New Zealand Histories III

Land Wars : International Finance – The Hidden Factor

Our Maori members might think the Pakeha won the war, but he only won the debt’.

John A. Lee, Parliamentary debate, 1939

We have previously examined the banking and land speculation activities of two of New Zealand’s most prominent citizens, Sir Frederick Whitaker, and Thomas Russell, and the role of the Bank of New Zealand in shaping the development of the colony. What became known as the ‘Piako Swamp scandal’ long dogged Whitaker’s political career. (K. R. Bolton, New Zealand Histories II: Europhobia Implicit in the School History Curriculum, The European New Zealander,

Land-sharking and loan-sharking went hand-in-hand and pervade New Zealand’s history since the earliest days of European settlement. This is the hidden factor in New Zealand’s history, and the key to understanding both our past, present and future, including the travesty of denigrating our Settler forefathers for the actions of an oligarchy that was only loyal to money.

Certainly we are not going to be informed about this crucial hidden factor by relying on the ‘histories’ curriculum developed by the Ministry of Education, or by academia, and the media. Indeed, as we have seen (ibid.), the Waitangi Tribunal when asking for an academic assessment on the actions of Whitaker and Russell, received a report that lauded them as visionary entrepreneurs. However, our Settler forefathers knew full well the character of these business activities. (ibid.), and in those times there were journalists and editors who sought facts, and parliamentarians who spoke out. Now we have nothing of the type.

New Zealand Founded on Debt

New Zealand was colonised as a land speculation exercise by the New Zealand Company. The NZ Company started as the NZ Association in 1838, with the international banker Sir Francis Baring M.P., as chairman. He was succeeded by Joseph Somes, the world’s largest ship-owner, after the name was changed to the NZ Company in 1839.

The intention was to offer land that had been purchased at quite generous terms from Maori. Vast tracts of land held by Maori through conquest and reconquest, were not actually utilised, but left fallow and deserted. Even after these payments, the welfare of the former Maori owners would be assured by leaving them 10% of the land they had sold, in reserve for future use. The land would then be sold at a cost sufficiently low to establish a new class of landowners, but sufficiently high to assure that emigrants from the destitute menial classes, given free passage on a voyage lasting three to five months, would be kept in thrall to the new landlord class. A Nelson press account explained:

Their principles of colonisation are few and simple. Capital and labour are the two articles the want of which is the greatest impediment to the progress of a colony. To induce capitalists to emigrate, labour must be easily procurable, or capital cannot be profitably employed. To provide this labour, land must be bought at a low price and sold at a high one, and the proceeds applied to the carrying out of labourers free of expense. But that the labour so sent out may be kept some time in the market for capitalists’ employ, land must not be sold too cheaply, or all the community become landlords at once. To keep up the price land, some person or persons, acting as a body, must possess large tracts of it, so as to command the sale of it in the market’. (Remarks on the causes and consequences of the [Warau] massacre, Nelson Examiner & NZ Chronicle, 23 December 1843).

Despite the adverse impact of the NZ Company on the Settlers, their dealings with the Maori were rather scrupulous. The hope was to avoid misunderstanding, considering the chaotic state of ownership claims the Company’s Agents faced. The NZ Company instructions to its Agents in dealing with Maori were clear:

‘ “We recommend,” say these instructions, “that you should, on every occasion, treat the natives with the most entire frankness, thoroughly explaining to them that you wish to purchase the land for the purpose of establishing a settlement of Englishmen there, similar to the numerous English settlements on the rivers Thames and Hokianga and in the Bay of Islands; or rather on a much larger scale, like the English settlements in New South Wales and Van Diemen’s Land, with which the natives of Cook’s Straits are very well acquainted. And you will abstain from completing any negotiation for a purchase of land until this its probable result shall be thoroughly understood by the native proprietors and by the tribe at large. Above all, you will be especially careful that all the owners of any tract of land which you may purchase shall be approving parties to the bargain, and that each of them receives his due share of the purchase money.”’ (Ibid.)

As one might expect, the oligarchs and plutocrats treated the Maori with far more regard than ever their consideration for the long-suffering Settler community. We are still reaping the results, with insult added to travesty.

The New Zealand Company failed in its undertaking and was left with a liability of £268,000, which was assumed by the Crown when the Company surrendered its Charter in 1850, despite the NZ Company having purchased land with Crown grants. The character of the Company’s Charter and its relationship with the Crown can be seen from the preamble to the 1851 New Zealand Company’s Land Claimants Ordinance:

‘…And whereas certain lands claimed to have been purchased by them from the aboriginal native owners have been conveyed to the said Company by grants from the Crown: And whereas, by an Act of Parliament holden in the tenth and eleventh years of the reign of Her Majesty, intituled “An Act to promote Colonization in New Zealand, and to authorize a Loan to the New Zealand Company,” all the demesne lands of the Crown in the Province of New Munster were for a limited period vested in the said Company for the purpose of promoting the efficient colonization of New Zealand and the welfare of the colonists thereof: And whereas the said Company, while in possession of their said Charter, did from time to time make and issue divers land orders or contracts for the sale of lands in New Zealand, and certain scrip purporting to confer upon the holders thereof the right of selecting land in the said Islands, and many of Her Majesty’s subjects have immigrated to New Zealand at the instance of the said Company, and have expended much of their capital in forming settlements on land so granted to the said Company and by them sold or contracted to be sold, but no legal title or conveyance was given by the said Company to the persons claiming title from through or under them in respect of such land orders contracts or scrip as aforesaid…’ [Emphasis added].

As the Act states, the NZ Company would be recompensed for money that was a Crown loan, for the purchase of land on which the colonists had expended ‘much of their capital’, but who had not received ‘legal title or conveyance’. The Crown assumed responsibility for giving legal title to lands that had been purchased by the NZ Company. The whole deal was a ‘fraud’, for which a public debt was created. (NZ Company’s Land Claimants Ordinance Act, 2 August 1851,

Hence the Crown was taxing colonists for the return of money that it had originally loaned to the NZ Company for its own profit. The Settlers were encumbered with a debt to failed speculators in Britain. This was regarded with outrage by the Settlers. The Daily Southern Cross editorialised:

The Canterbury settlers, it is clear, are determined to make a gallant stand for their rights as Englishmen. That worse than highway robbery, the abominable attempt to saddle upon the helpless and struggling colonists of New Zealand the £268,000 of debt incurred by the New Zealand Company for its own selfish purposes, is exciting universal indignation. The Times’ is honourably eloquent on the land question in stigmatizing the designs of Downing Street as “a great public fraud,” which it calls upon the colonists to repudiate and resist. If – says our spirited contemporary, – If New Zealand had a Constitutional Government, she would not pay one fraction either principal or interest of this nefarious demand’. (The Southern Cross, 24 October 1851).

The press lambasted the deal between the Colonial Office and the NZ Company as a ‘fraud’. The NZ Company ‘stopped all colonizing operations in 1843’, yet the liabilities of the Company had been incurred since that time. The claims against the Government had arisen due to what amounted to a conflict between the Company and the Colonial Office regarding the nature of land purchase and settlement, the Colonial Office regarding the process as haphazard. It was the Settlers who bore the consequences. (Wellington, Lyttelton Times, 25 October 1851). However, the absentee land proprietors did not lose out when the Charter was surrendered to the Crown, as the NZ Company’s Land Claimants Ordinance, which ran until 1861. Land was offered in compensation to absentee proprietors, while those colonists who had worked the soil could not afford to repurchase other lots. The Wellington Independent commented that this would ‘swallow up every acre of our best land, without benefiting us by sending out a single labourer’. (Wellington Independent, 8 November 1851).

Debt Early a Primary Concern

There was a time when New Zealanders were well-informed as to the nature of the ‘land sharks’ and usurers who were distorting national development. South Islanders (or Middle Island as it was then referred to) were so outraged by having to share the burden of the debts incurred from the Land Wars, which they regarded as entirely a Northern issue, that they petitioned Parliament demanding that the South Island become a separate political entity. In 1863 The Press was warning of the debt burden on the South Island that was going to be incurred through land settlement in the North:

The important measures which have been before the General Assembly consist in a scheme for taking eight or ten million acres of land from the Natives of the Northern Island and placing settlers on it who are called “military.” A loan of three millions is to be raised, which is to be fixed on the revenues of the whole colony; or, in other words, as more than two thirds of the public revenues are found by the Middle Island, the loan for colonising the Northern Island is to be mainly provided by the Middle Island. It is worthy of remark that the Colonial Treasurer made his financial statement on the evening of the 11th November. In reply to a question from Mr. FitzGerald, Mr. Wood stated that the Government was willing to take the whole debate on the financial scheme on the second reading of the Loan Bill. The second reading was brought on the next morning, about fifteen hours after the financial statement. They positively refused to postpone the debate for more than twenty-four hours, and were strongly supported by Mr. C. Wilson, the member for Canterbury. In other words, every attempt at discussion was stifled. To call on the House to discuss a most complicated financial scheme virtually without any possibility of discussion, when that scheme consisted in burdening the Middle Island with a debt the largest the world has ever yet heard of in proportion to the community, was an act which the electors of the Middle Island had better ponder over…’ (What the General Assembly is doing, The Press, 2 December 1863. Emphasis added).

In 1870 a petition was read to the House from South Islanders requesting that New Zealand be divided into Northern and Southern Province (the latter called Middle and Stewarts Islands). Much of the time of the legislature was taken up with debating Maori affairs, which had no relevance to the South. Indebtedness had been incurred mostly by the North, and amounted to £20 per head, and in interest £1 per head annually. (Notes on Parliament, Daily Southern Cross, 15 July 1870).

Individual citizens often expressed their concern about the degree and character of debt and the impact it was having on national development. The letters to the editor indicate the depth of knowledge of the debt-finance system that citizens then had, about which today academics, journalists and parliamentarians are oblivious. A correspondent wrote to the Otago Daily Times in 1871 a detailed account of the financial situation in relation to the land wars:

TO THE EDITOR. Sir—No one who reflects upon the financial situation of this colony can relieve himself of the idea that it is impossible that we can attain to any degree of greatness or prosperity under the existing regime. A nation’s progress or decline is known by the state of its finances, and in this department it is an indisputable fact that we are in a deplorable condition. Need I remind anyone that our government expenditure from revenue reaches nearly twelve pounds per head annually, that our population is about a quarter of a million, and that our debt amounts to nearly eight millions?’

It is notable that the correspondent recognises debt reduction to be the first duty of politicians, and that debt is at the root cause of a nation’s weakness and destruction. Such concepts are no longer understood at any level of bureaucracy, parliament, press or academia.

From this it may be seen that we are oppressed by taxation, and borne down by debt. While this is the case, the first duty of our statesmen should be to lessen the one and devise means whereby the other may be diminished. We have long ago entered upon and pursued a policy which has brought upon us political weakness, and which, if continued much longer, must eventuate’ in political destruction. That policy has been to increase to the highest possible limit both debt’ and expenditure. The guiding idea in all our political action should be quite the reverse of this; but apparently our presiding men have lost sight of the very first principles of political economy. We are a very young colony, but we have got very rapidly into debt’.

The correspondent, echoing the widespread concern that had promoted an independence movement in the South Island, places the Land War responsible for much of the indebtedness, and the taxes that served the interest. The correspondent certainly repudiates the notion today that the Settler had a greedy avariciousness for Maori land but was, rather, aggrieved at the cost through debt and taxation.

I need scarcely repeat how a large portion of this debt has been accumulated; everyone knows that the Maori war has been the great and effectual cause of much of it. Our war—like war in every other country—has been the expeditious means of creating a national debt. We may look upon our debt and the native war as complimentary disadvantages, so that if the war continues, our debt will continue to increase. The war policy has been, and is so intimately connected with our finances, that the present and future of that question form a subject of the first importance to us, while it is not necessary to enquire who were responsible for the origin of the war, yet I should like to know who will have to conduct it for a termination. I should like to know how the Imperial and the Colonial Governments stand related to this question, and how far their powers are acknowledged and defined.

The past has been characterised by criminations between these two powers; we have asked aid from the Imperial authority, we have also told them that we could do without them, we have had an almost non-intervention, and we now have a self-reliant policy. After twelve years or more Colonial and Imperial administration on this important matter, what has been the result? We are left by our own choosing to carry on single-handed the war with the Maoris; we have been left over head and years in debt; we have borrowed money largely to prosecute the war; we spend yearly incredible sums from our revenue for native purposes, and what advantage have we got by it all at this present moment? Are Native affairs more permanently satisfactory now than they were years ago? Is it likely that the Maori rebellion is hushed for ever? I do not think that there is much reasonable hope that the future will be any better than the past; and if not, we know the consequence: a few more millions will have to be spent either of our taxes or borrowed money’.

The correspondent evokes a very apt image that has long been repressed from the national consciousness; that the Settler built New Zealand with ‘a sword in one hand and a trowel in the other’, trying to carve out a nation from the wilderness of lands that had for a large part, always been devoid of human settlement, which had nonetheless been paid for, and which were now subjected to Maori aggression, all the while imposing an increasing debt burden on the hapless Settler. What a travesty that the image today being imposed especially on children is one of the rapacious, avaricious Settler, responsible for our ‘white privilege’.

The Native war has been the curse of this country, and will continue so, I fear, for years to come. No one can estimate what this colony would have been if there had been no Native difficulty to encounter. We have had to work with the sword in one hand and the trowel in the other, and the effect of it all has been to retard our colonisation, to cripple every interest, and to bring upon us the thousand and one evils under which we groan’. (Emphasis added).

Decades before banking reformers such as Social Credit theorist Major C. H. Douglas (whose New Zealand tour had a seminal influence on the Labour Government’s financial policy during the Great Depression), Labour’s most avid champion of banking reform, John A. Lee, Sir Henry Kelliher, the crusading editor of The Mirror, and the best-selling author and veteran journalist Arthur N. Field, the writer points to the causes for the stunting of New Zealand’s nationhood.

All dreams of greatness are baseless, and all attempts to raise us from depression futile, while we have so great and increasing in a debt to liquidate. I do not propose to censure either the Imperial or the Colonial authorities for past blunders or incompetency; the situation of affairs was often perilous and aggravating, and it was no small matter to grapple with. Many think that the Imperial Government, in leaving us with the difficulty and with the debt, has fallen far short of her duty to us as a dependency of the British Monarchy. We will pass by this for the time being, and say, “How are we to get rid of the debt incurred on account of the war?” What is to be our future policy with regard to it? If we are to increase our taxation, to persist in the wretched past policy, then irretrievable bankruptcy is imminent. If instead of the revenue being spent to enrich the inhabitants and to conduct the Civil Government of the colony, one complete third of it is required for interest on debt, and thousands a year for defence purposes, then there is an end to all prosperity for a long lapse of time’. (Emphasis added).

The panacea for debt was then, as now, more debt. That is indeed precisely what the writer stated: ‘the united wisdom of the New Zealand Parliament has said, as a panacea for it all, borrow more money’. The financial system is based on compound debt and compound interest, borrowing to pay the interest on prior debts. As will be explained later, it took decades before the debt incurred by the Land Wars was finally paid. Today, the Labour Government postpones economic crisis by buying $80,000,000,000 of its own bonds back from overseas financial institutions at prices determined by the open market, so that those institutions can reinvest in New Zealand. The logical option would be for the Government to bypass the private financial institutions, and create its own credit through the Reserve Bank, as it did in the mid-1930s; albeit a policy that was even then aborted by the Labour Government. (K. R. Bolton, Government Borrowing, Debt, and Misconceptions about Social Credit, The European New Zealander,

If we were once relieved of this debt and placed under judicious government, we would rapidly gain a prestige second to none in the Southern Seas. Our statesmen are all well aware of this, and yet what do they propose to do? Although knowing that it is with the greatest difficulty that we can meet our present obligations, and with the clear prospect of a decreasing revenue, the united wisdom of the New Zealand Parliament has said, as a panacea for it all, borrow more money, and by this means we shall be lifted from our humiliating position.’…

After contemplating the suggestions of others about repudiating the National Debt, the writer suggests that the Crown assume payment of the costs of the Maori war as a duty to the young Colony. The Crown had after all very reluctantly established British law for the protection of Maoris and Settlers alike, largely at the request of the Maori, whose internecine warfare had brought them to the verge of extinction (another matter for which colonialism is now blamed). The writer asks whether British policy is more concerned about supposed British interests on the European continent than providing support to her own colonists who settled here supposedly under Crown protection. He also asks whether the Crown is more concerned about Blacks in the West Indies, than her British subjects in New Zealand confronted by Maori aggression.

‘…I think it is the duty of the home Government to quell all such insurrections as those of the Maori, and to pay for the protection of those persons under their flag. We have been assured by Lord Granville that in the event of the colonies being attacked by an external foe, we should have England’s last man, last ship, last shilling to defend us; and yet while we are grasping with so formidable an enemy as the Maori, we are to receive no assistance. I fail to see the difference between the Maoris and any other power opposed to her Majesty Government, and offering armed resistance to her representatives.

There is a growing belief that England desires by her cold colonial policy to force the colonies to declare their independence; but I can hardly think that British statesmen are so careless of the importance that the colonial possessions give to monarchy, as to adopt such a procedure. And yet, how strangely her colonial contrasts with her foreign policy. She has been pleased to enter into any number of treaties to protect the smaller powers, of Europe; she has spent millions in defence of these powers, and given hundreds of thousands of her soldiers to death to keep some imaginary balance of power—all this shows how she devoted herself to a foreign and |ruinous policy. But yet let us remember that she was gracious to the West Indies, when she voted twenty millions to liberate the blacks in that place; and yet, forsooth, two or three millions would be grudged to protect us from the atrocities of the Maoris, when colonising her Majesty’s dominions.

If we owe allegiance to Her Majesty, then we are entitled to her protection in our exceptional circumstances, and under no other condition can we, I believe, keep possession of the North Island. We cannot longer continue to pay interest on so enormous a debt, nor contribute yearly large sums for defence purposes. England should in some way or other indemnify us for such a policy. To attempt to carry it on ourselves, would only be to keep us at a standstill, if not to retrograde for many long years to come. No ingenious funding system will, I fear, clear off the debt. We are, of course, able and willing to pay the debt that has accrued under all other heads, save that of the War Department’.

The writer urged a total overhaul of the administration, rather than parliamentary tinkering. He concludes by condemning the Treasurer, Julius Vogel, for the controversial borrowing policy which took decades to redeem.

Having once accomplished this, the next thing would be to exercise the greatest retrenchment in the Civil Government of the colony, to such an extent as to keep—what our statesmen appear incapable of doing —our expenditure within our revenue, which should be raised so as to protect and encourage the growing interests of the colony. Nothing short of this will ever raise New Zealand to power or prosperity. All that is now being done by our politicians is only tinkering and patching, that will require to be demolished and rebuilt. Borrowing money, unless in very rare cases, is rather speculative and ruinous. I would much rather have seen Mr Vogel at home asking the Imperial Government to reduce our debt, than for an opposite purpose. Until New Zealand adopts some radical alteration in her affairs, she will never advance to the satisfaction of either her inhabitants or her rulers. We want in this colony a class of statesmen whose motto will be “Peace, Retrenchment, and Reform,” and who will vigorously carry out such a policy in its integrity. Apologising for writing at such length, I am, &c,. D.R.W’. (Our financial and native policy, Otago Daily Times, 17 April 1871).

Julius Vogel’s Borrowing

Julius Vogel as a kangaroo being pursued by Extravagance, Borrowing, Deficit and Spending.

The policy of borrowing embarked on by Julius Vogel, as Treasurer, and later as Premier, began in 1870. Over ten years £10,000,000 were to be borrowed from The City of London, namely Rothschild, at a time when New Zealand’s population was a quarter million. By the end of the ten years, the amount had doubled. As Premier in 1874 Vogel returned to England, without announcing his intentions to Parliament, in the company of his banker, BNZ director, Thomas Russell, and sold to Rothschild £4,000,000 of New Zealand 4½% stock at a discount of £352,000, despite the objections of Crown Agents. He then undertook a sixteen month tour of the Continent at New Zealand’s expense, rendering his travelling expenses to Parliament on his return, for which he received £5640, albeit £2750 less than what he asked, much to his outage, although a knighthood was forthcoming.

Half the proceeds from the loan were then deposited at Russell’s bank, the BNZ. By 1876 annual charges on the debt were taking two-thirds of Government revenue. To avoid bankruptcy of the Colony, Vogel abolished the provinces, taking the provincial revenues from the sale and rental of Crown land to balance the budget. As A. N. Field remarked, ‘thus the soil itself was being sold to keep the public creditor quiet’. (A. N. Field, The Truth About New Zealand, Veritage Publishing, Western Australia, 1987, pp, 12-13).Vogel held an account on particularly favourable terms at Thomas Russell’s bank, the BNZ. It was under Vogel that the Piako block was confiscated and illegally given to Russell and Whitaker in 1876 at a discounted price. (Field, p. 12; Bolton, New Zealand Histories II, op. cit.).

  Ill Fares the Land 
 Far, far away, thy children leave the land.
 Ill fares the land, to hastening ills a prey,
 Where wealth accumulates, and men decay:
 Princes and lords may flourish, or may fade;
 A breath can make them, as a breath has made;
 But a bold peasantry, their country’s pride,
 When once destroyed, can never be supplied. 

 Oliver Goldsmith,  The Deserted Village, 1770.  

The fall of produce prices had reversed the short-term benefits of borrowed money. Despite refrigeration enabling exports of frozen meat and dairy products, money-lenders reaped the benefits. In 1882 William Rolleston, M.P. told Parliament that the only alternative for the farmers was to be tenants of the money-lenders or tenants of the Crown. Another South Island M.P. described the destitute situation of the farmer in the South in 1885, ‘Sir, when I go through the country and see farm after farm with not a soul on it except an agent of the NZ Loan and Mercantile Company, am I to say settlement is progressing in Canterbury and Otago?’ A. N. Field relates that farms became unsellable, the towns filled with unemployed, and many left New Zealand. ‘Before the long depression was over it was estimated that in some districts three-quarters of the leading colonists had been ruined’. (Field, op. cit., pp. 21-22).

As in nations throughout the world, then as now, repayment to the money-lenders always takes precedence over farmers and food. In 1890 the BNZ formed the Estates Company to sell foreclosed land and other assets that had fallen to it in debt. (Field, p. 24). Another BNZ offshoot, the NZ Loan and Mercantile Co., cancelled the debts of Thomas Russell. The Government formed an Assets Board to take over the assets of the Estates Company that were not wanted for resale. The Liberal Government sat on the land rather than offering it at discounted prices to productive farmers. (Field, pp. 30-31).

The land question has never been one other than that of debt for the profit of speculators. When in 1919 the Government, setting aside £16,000,000, for the purpose, offered grants to returned soldiers for the purchase of farmland, many were encouraged by a temporary rise in wool and other produce prices in 1921. The grants were to be paid on mortgages to private finance companies, and usually included second mortgages. Prices crashed in 1922. The soldier-farmer generally ended up either with foreclosure, and left the land, or worked in virtual servitude to the money-lenders to pay the interest on the loans. A. N. Field, looking at the statistics for mortgages, stated that ‘some must have been working for year for little more than groceries and a roof over their heads’. (Field, p. 56). In 1927 the Minister of Lands stated in Parliament that, ‘There are more mortgages than I care to think about, and mortgages far in excess of the present-day government valuation’. Most of the farmers were heavily over-mortgaged; the Minister’s only answer was for them to walk away. Field commented: ‘such was the soldier-settler’s reward from a generous country’. (Ibid.).

What of the situation today, a century later, in these progressive and affluent times? In 2019 the farm debt was $62.8 billion. The Government sought to address the problem with a Bill that provides for mediation between farmers and bankers. As the Agriculture Minister Damien O’Connor stated at the time, the legislation guarantees nothing for the farmer other than a ‘process’. ‘According to Reserve Bank figures, total farm debt in New Zealand is $62.8 billion – that’s up 270 per cent over the last 20 years’.(New Zealand’s farm debt is close to $63 billion – a new bill seeks to ease the financial burden, NZ Herald, 18 June 2019).

Still Paying for the Maori Wars in 1940s

Rebellions among disaffected Maori chiefs increased the public debt, taking nearly a century to redeem. This has permanently distorted national development. The press reported that debts dating back a century were due to mature in London in 1939, and were repayable in 1940.

Debts for the early days. Loan obligations dating back to the very start of responsible government in New Zealand are included in the £ 17,173,191 of public debt which is to mature in London next year. It also includes debts arising out of the financing of the Maori wars in the ‘sixties and Sir Julius Vogel’s public works policy in the ‘seventies of last century. Some of the original loan transaction involved in this consolidated stock relate to many important periods in the country’s history from the time in 1856 when it first incurred a public debt, which amounted to £290,201,342 at the close of the last financial year’. (Money for Maori war due in London in 1939, Waikato Times, 17 November 1938).

With an interest of 3½ per cent maturing 1939, this became redeemable in January 1940. £50,000 of the debt accrued from the ‘first New Zealand loan of £500,000’, taken out in 1856 ‘to redeem a lien held on the lands of the colony by the New Zealand Company, and to provide the capital for the purchase of native land’. This was from the grant that the Crown had made to the New Zealand Company, converted into a public debt, referred to previously.

Also included in the £17,173,191were two amounts from loans raised to finance the Maori war in the early ’sixties.

The Maori war commenced in 1860, and in the following year £150,000 was raised at 6 per cent through the Union Bank of Australia for war purposes, part of it being absorbed in payment of compensation to settlers in Taranaki. There is of this loan £77,064 in the amount maturing next year. A further loan of £500,000 was authorised in 1862, but was later incorporated in a loan of £3,000,000 authorised in 1863. The amount of this loan consolidated in next year’s maturing stock is £1,168,614’. (Money for Maori war due in London in 1939,ibid.).

Most of the Maori war debts had been paid by the mid-1940s, while New Zealand had been engaged in the Second World War. In 1943 an enquiry to The Wellington Post as to whether ‘New Zealand was still paying interest on money borrowed during the Maori wars’, elicited a reply from the Treasury Department that ‘of the money borrowed during the Maori wars; there was now only a small amount outstanding. If necessary, the amount outstanding could be repaid, but often in determining such matters it was considered more expedient to repay some other debt which perhaps was bearing a higher rate of interest’. (Maori war debts, Gisborne Herald, 1 November 1943).

John A. Lee, who had been expelled from the Labour Party in 1940 for condemning the Government’s failure to fully implement its platform on banking and credit, exposed the way the debt-finance system had distorted the nation’s development. Founding the Democratic Soldier Labour Party (DSLP), he faced Communists and ‘union bosses’, outraged Labourites, and vested financial interests. (K.R. Bolton, Opposing the Money Lenders, Black House Publishing, London, pp. 35-93). What Lee stated on the Maori war debts is among the most relevant factors in understanding relations between Maori and European, striking at the root of New Zealand problems. For this reason you will not find any reference in history books, school texts, lectures, ‘histories curricula’, Waitangi Tribunal submissions, or from Stuffed journalists, or the Pakeha-Maoris who comprise Government.

In 1939, Lee, still a Labour M.P., explained the character of the debt system with reference to the Maori war, in a Parliamentary debate, a press report stating:

Continuing his examination of the public debt, Mr Lee declared that most living New Zealanders had never borrowed to buy goods, but only to meet interest. In 40 years there had been an increase in the debt of £133,000,000, and in the same period £145,000,000 had been paid in interest. “Included in the £17,000,000 loan which we are supposed to have settled,” he continued, “but which Montagu Norman [Governor of the Bank of England] settled in a way he hoped would settle the Labour Government, is a sum borrowed for the Maori War. A Labour member: Who won the Maori war? Mr Lee; The debt finance system. Our Maori members might think the pakeha won the war, but he only won the debt’. (London ‘Shylocks’, Evening Star, 10 August 1939).

Having been expelled from Labour, Lee stated at a 1940 election meeting that through her indebtedness, ‘Britain was still paying for the battle of Waterloo’.

J. A. Lee. M.P., in a recent Democratic Labour Party rally speech, quoted some cases of New Zealand borrowing. For the Maori War the country borrowed £77,000. At simple interest £278,000 had been paid, and the original debt of £77,000 still remained. “I say ‘Who won the Maori War?, and the answer is ‘Montagu Norman.’” In 1863 we borrowed £1,168,000 and so far we have paid £3,796,000 and still owe the principal. (Country is still paying, Pahiatua Herald, 22 August 1940).

Speaking at a 1943 election meeting of the DSLP, Auckland East candidate Flying-Officer L. S. Dromgoole spoke of Lee, alluding to the Maori war debt, according to a press report:

‘“I know only one man in New Zealand who has the courage to face Mr. Montagu Norman. That man is John A. Lee!” said the Democratic party candidate for Auckland East, Flying-Officer L. S. Dromgoole, in a vitriolic address in the Municipal Hall, Newmarket, last night. The candidate was speaking of his party’s determination to take over banking and revise New Zealand’s war debt. “Britain hasn’t yet paid for the Battle of Waterloo,” he said. “New Zealand hasn’t paid for the Maori Wars. Year by year the interest of our debt mounts up. We, who have fought so many wars for Britain, want a reasonable settlement. The boys who have fought overseas will demand it.

‘“If you vote National or Tory Labour, you’ll be betraying the boys who are fighting overseas for decency and democracy. You’ll be sacrificing the babies of the future on the cross of gold. Democratic Labour is pledged to fight the gold standard and vested interests.”’ (Cross of Gold. Mr. Dromgoole on War Debts, Auckland Star, 22 September 1943).

While the Labour party had assumed Government in 1935 on the promise of nationalising the Reserve Bank and issuing state credit, ironically it seems likely that what had been widespread knowledge and debate amongst the public on the character of the banking system, dissipated and evaporated due to a naïve assumption that the matter could be left to the Labour Government to settle. Lee was sacked from Government because of his principled stand, and after the failure of his new party, Democratic Labour, to secure the election of candidates, including the loss of his own parliamentary seat, apathy and ignorance replaced the intelligence and logic of our forebears. Today, true to form, Labour’s ‘socialist’ answer is to whore itself to international finance for a colossal $80,000,000,000.

Blaming ‘white privilege’ and settler colonialism for the retardation of our nationhood, while pandering to perennial Maori grievances, is a red-herring that hides the real issues. Denigrating the Settler heritage of ‘trowel and sword’ is much easier than confronting the actual causes of racial, social, moral, cultural and economic maladies.

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