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%.