The Vogel Era
In spite of this growth, no one was content with things as they were around 1870. The gold boom had passed from the South Island leaving a surplus of unemployed; the wars left the North Island jittery, and anxious for a policy which would at the same time neutralise the Maori threat and secure rapid economic expansion. Julius Vogel, an ex-Otago politician who had experienced the gold boom, supplied what most politicians concluded was the answer: a policy of expansion based upon overseas loans. This was hardly a revolutionary proposal, except in scale; the central government had borrowed before for war purposes, and the provincial governments for development. Only Otago and Canterbury had done so with success; the rest had become embarrassed and had so lowered the financial reputation of the colony in London that by an Act of 1868 the central government assumed all provincial debts and prohibited future provincial borrowing.
Vogel was proposing, by calling in 1870 for loans of £10 million over 10 years, to make the central government the chief agency of development. Initially the money was to be devoted to railway construction in the South Island (here, already, decent roads existed), to roads in the North Island (these, as well as opening country to settlement, would bring civilising influences to bear upon the Maoris), and to assisted immigration. Though Vogel made plans for the loans to be secured against land – plans which were frustrated by jealous South Island provincialists – his optimism convinced him that the best security was the economic strength which would be brought about by good communications and an increased population stimulating agriculture and pastoral farming and exploiting newly discovered resources, notably through mining and manufacturing. Unluckily for the colony, world prices for New Zealand exports generally fell over the next 20 years, the gold industry continued to dwindle, and no new enterprises of significance were discovered. In the same period, 1870–90, nearly £30 million was borrowed, frequently at high interest rates; by the end of the century fresh borrowing did no more than meet charges on existing debt.
Vogel carried the day, and dominated politics from 1870 to 1876, as Colonial Treasurer for the greater part of the time, and twice as Premier (1873–75 and 1876) as well.
Apart from the development policy, Vogel also created the Public Trust Offices and State Insurance. He attempted to bring in forest conservation to preserve assets for future use, but was blocked by provincial politicians, unwilling to accept limits upon their control of land. This encouraged Vogel to consider the abolition of the provinces; he had been prepared to work with them, but he would not permit them to obstruct what he was sure was the destiny of the colony. So, in 1875, he moved for the abolition of the North Island provinces, and soon expanded the Bill to include complete abolition. There was a good deal of noisy argument, especially during the 1875 election which preceded the Bill's implementation, and notably in self-confident Otago where some petitioned the Crown for separate colonial status. But in fact abolition, seemingly a major affair, was put into effect painlessly.
This was so because men were swayed by the interest of their localities and for the most part concluded that local interest would be best served by a strong central government. The central government, in fact, had been in charge of further development since 1870, while the provincial responsibilities diminished. Politicians, not ceasing to look for local advantage, concluded that it could be best secured centrally. Thus most provinces favoured their own abolition, and few people grieved for the loss of separate institutions.