Original Correspondence.

Auckland Chronicle and New Zealand Colonist, Volume 2, Issue 39, 2 May 1844, Page 3

Original Correspondence.

DEBENTURES, To the Editor of the A ucktand Chronicle . Sir,—Tho’the tone, almost expressive of indignation, with which we are in the habit of speaking of our small Capitalists at home for not coming out en masse to New Zealand, may not seem strange to the many persons amongst us, who, having visited the other Australian Colonies, have, after deliberate comparison, chosen ours for tbeii place of rest, it must nevertheless elicit an occasional smile from those who have come here directly from England. It is true indeed that while, in common with the settlers in other colonies, we are freed from a countless host of grinding and oppressive imposts, and other evils by which the spiiit and energies of many of our brethren at home are so effectually crushed, there are several, and splendid advantages of which we may boast as in a great degree exclusively our own. We speak wish untiring and perhaps excusable zeal of oui singularly geuial climate, the luxuriance of ou> soil, the vastness and variety of its mineral wealth, the unparalleled facility of internal communication, by means of the navigable riv rs by which it is in every direction traversed, the never enough to he idmired position of our islands oil the globe, and die foitunate degree of civilization attained by the natives, sufficiently g eat to make thtmemis neatly useful, and not at all formidable to us. But it most be obvious to any one who will take the trouble to think but t-ver so little upon it, that these advantages, g. eat as eai h is in itself, and wonderful as lit-* combination of them is, will not, alone and,of ih> tnseives, induce so many capitalists to come amongst us, as we think we have a right to expect, while ceiuin impediments to the security and freedom of their opt rations,-now in existence, continue nmemoved.

Persons upon their first arrival in the Colony will r> quire some time to inform them«elves of the exact situation of our affairs, before they can be judges of the most prudent methods of disposing of their capital. It will often too be prudent or necessary to remove capital from one speculation to another, and an eligible opportunity for embarking it in the new speculation may not immediately occur. In order theiefore that the operations of tiie capitalist may be secure and free, it is absolutely necessary, that there should be some perfectly safe m'de of investing money at moderate interest, to which he may have recourse, either before be enters the field of speculation ai all, or during the inteivals intervening between the removal of his capital from one speculation and his embarking it in another. He who would distinguish himself in the war of speculation, particularly colonial speculation, woti d require an impregnable position, from which lie might at his ease contemplate 'lnwhole plan of the battle wiih the view of detei = mining the most advantageous point of attach, ana to which, if partially worsted in the conflict, or displeased with the degree of his success, ho might retire, in order to recruit hi- impaired strength, to boroish Iris arms, and fix upon another point in which he could exert his prowess to more advantage. But if a perfectly safe mode of investing money at small interest be necessary for the speculating capitalist, how much more necessary must it be for those, whose ignorance of business unfits them for speculation of any sort, and those, whose natus ral timidity and caution induce them to prefer the quiet retirement and steady tranquility of mind procurable by a small but certain income, to the continual and wasting alternations of hope and fVa> which are the inevitable attendants of speculation 1 And how many thousand capitalists of both these latter kinds are there in England, to whom New Zealand (could they hut have in it some mode of safely investing their little properties at moderate interest) would be a kind of paradise. Through the want of safer modes of investment the colonial public have been compelled to have recourse to banks of circulation and deposit; but how little calculated they are to satisfy the rigorous requirements of the proprietors of capital might be easily proved by an examination of their constitutions and practice, compared with the circumstances of the different colonies in which they are established, if their continual and wholesale failures did not render such arguments wholly unnecessary. But, however this be with respect to colonies long established, it would plainly be to waste wrrds, to employ them in proving that such little banking firms as could be afforded by an infant colony, frail as they must for a long time be, and infirm even to the tottering point, could not supply the desideratum mentioned above. Let 11s suppose tbe present financial difficulties of our local government to continue for some time, and Debentures bearing moderate interest to be issued as securities for the payment of the various debts incurred, a public debt would be thus oteated, which would form a fund, in which capital could be invested with as much safety as the most requiring person could ask. For is there a sensible man amongst us, who would question tbe ability of the local government to pay such a debt out of the revenues of the colony within a reasonable number of years, and the interest at regular intervals while ihe principal was unpaid, or the willingness of the government at borne to pay it in case of the insufs ficiency of the revenues of the colony for that purpose? There are indeed some few persons who, for reasons best known to themselves, pretend to believe that, because Lord Stanley addressed some remonstrances to our late governor for an injudicious expenditure of public money in some few instances, our present governor and his successors stand advertised to the public of Australia, as per sons to whom no credit is to be given, even tho’ the debt is about to be incurred for the payment of their officers or other indispensable purposes. And they would have us believe ibis, knowing as well as we do, that the confidence placed in Captain Fitz Roy by Lord Stanley is now reflected from his Lordship to every man in these colonies—a confis deuce that must be increased by his popularity, which is too great to be ascribed altogether to the misfortunes of his predecessors. But I must not pursue this subject farther, for the proposition in question cannot be more absurd than a serious attempt to relute it. Passing however from these

few men, I think it right to notice some objections that will probably be made to what 1 have written above, by persons who have never turned their thoughts to monetary matters, and by light-headed men wbo judge without thinking, and talk without judging.

It will be said, that the Debentures will, in business, come iuto constant collision with the notes of the New Zealand Banking Company;— that the noc-convertible paper must yield t& the convertible, and that of course the real value of the Debentures will be always below the nominal, and may be so to any conceivezble extent. In this very supe'ficial way of considering the subject, the difference between Debentures payable at a very distant or indefinitive date and bearing interest in the interim, and promissory notes payable to bearer on demand, is altogether lost sight of. Bank-notes bearing no interest are adapted to the purposes of what is properly called circulation ; for who would keep them for long periods of time ? But Debentures bearing interest payable at stated times, will become a fund in which capital may be invested, and will of course be kept by persous contented with tbe rate of interest which they bear during their lives, and by others till favonrabie Opportunities of speculation, or more eligib'e methods of investment present themselves. Such Debentures would continually pass from the hands of one class of the community into those of another—from those desiring to speculate or to invest their capital more profitably than in Debentures, to those set-k----ing to invest their capital in Debentures either permanently or temporarily. It is in this verv limited way, and this only, that paper of this sort circulates (it [ may apply the term) and even in tliE, ina peculiar manner, namely, thro’ the agency of a broker. Such paper therefore cannot with any propriety be said to form part of the circulating medium of any country, nor come into collision with bank-notes, but is nevertheless coisvertib e into gold thro’ the agency of brokers with greater cerainty and nearly as gieat facility as bank-notes themselves. The ieal value of such paper wiii of course oscillate about its nominal value, but, on account of the certainty of tbe payment of principal and interest, only to a small extent. The direction of the oscillation, as well as its magnitude, will depend upon a variety of circumstance?, but infi= nitely more upon tbe profits to be made by speculas lion than upon any thing else. When the profits of speculation <ne great at any time, the supply of Debentures will bear a greater proportion to the demand than usual,and the price of them will fall, and the contrary will happen when the profits of speculation are small. It will be said too, 44 is there a public debt to he created, am) are the people of this infant and weak colony to be burdened with tbe payment of ‘ts int-rest for the convenience of a tew monied men?” Certainly not. The debt is here supposed to exist —it is supposed to he a necessary evil, and one of several advantages likely to lesult from it is pointed out. To advise evil bat good may come froip it is always blameable—to point out advantages that may be derived from evils already existing is never so. It is hardly necessary for rip to observe that what has been written above can be considered! asj strictly applicable only to Dehens lures that are securities for the payment of a public debt more or less permanent. There is another impediment to the fieedom and safety of tire operations of capitalists in colonies of a most serious kind, upon which I expect to be able to address you soon. I am, S r, You s, &c., &c., SUBURBAN US,