STATE OF THE COUNTRY—CREDIT.

Dunstan Times, Issue 514, 23 February 1872, Page 3

STATE OF THE COUNTRY—CREDIT.

—o— TO THE EDITOR OF THE DUNSTAN TIMES.

Sir. —Lb lias -boon sometimes remarked that any general statement respecting the character or condition of a country is necessarily absurd. Such are the various and opposite conditions and circumstances of different sections of society, what is “true in a limited decree and ina.particular relation, becomes false if predicted of the community generally. Yet this idea—though in some respects admissible—does not preclude the supposition that there may be some general condition or circumstance in the state of a country—the complex or aggregate result of the operation of its various agencies—which, from its prominent and generally prevailing aspect may bo characteristic of the condition, political or economical of the State.

The public life of New Zealand and the varieties of opinion existing, respecting the state of the country and recent events, afford evidence confirmatory of the preceding observations. While some classes are complaining of “depression of trade,” “ commercial stagnation ” and decline of the public- revenue; others point out to the increase of population, the brightened prospects of the pastoral interest, the progress of settlement, and,internal improvement generally. If the Legislative Assembly, in its sessional proceedings represent public opinion and the state of public affairs correctly, it m lydie concluded that at the present time, and for a considerable time preceding, the condition of the country has not been satisfactory in the opinion of public men. This opinion is not confined to one political party. It is entert fined by the ministerialists for that great worn—the chef de oeuvre of their policy—upon which they plume themselves ami congratulate the country—was especially designed as a remedy for existing evils. The opinion is shared by the opposition, who do not deny that the prognostications of disease Jure correctly represented, but maintain that the remedies prescribed by the ministerial dootois are inadequate to its cure. But quitting generalities and looking more intently at the subject we may discern that the evils complained of are - not of the most grievous political character. None of the great scourges of nations afflict us, nelthe war, nor famine, nor pestilence, butooru r misfortunes arise from some minor causes of national disturbance-from some changes in the economic condition and relations of society—as .from some defalcation in the productiveness of labor, or the disturbance of the social-equilibrium by the inequitable exactions oftho g ivornmeuts or their inju-

dieious policy. A glance at the condition of the staple producing of the country wil seive to elucidate the character of the crisis, an I hi this view the gold producing interest has the first claim to attention. The authentic announcement of the discovery of gold in British or American territory—has, it is well known, been immedi* ately succeeded by the migration of large numbers of people to the centre of attraction, characterised from its magnitude and impetuosity -a “ rush. ” This rush has consisted in the first instance, chiefly of diggers, bonn fide ; many possessing some pecuniary means, and many also without aiiy. Immediately accompanying or following in the wake of this primary wave ol population is a misce'laucous congretationf of ad venturers of various character and pursuits, but containing a large number of persons having commercial connectionspossessing capital and credit. So soon as the new gold-field is developed into shape, and the miners have become settled on the workings, the trading and commercial classes establish themselves in their vicinity for the purposes of business, and thus their capital becomes located, and is made available for the sustenance and development of mining industry. It is the diggings alone who take the in itial steps in this development, but their own unaided resources, as a rule, are too limited to enable them to engage in enterprises not immediately remunerative—as in the construction of preliminary works for water-supply, or machinery, &c., and hence it became necessary, for the perpetuation of mining industry, and the efficient development of the auriferous capabilities of the several districts, that capital should be advanced to the.working miners on the|oredit of the pro spectivo prospect of mining labor.

From this cause, a system of credit bcl came prevalent in Otago at a relatively earlier period in the occupation of the mines than in Victoria, in consequence of the different character of the deposits. The form of this credit, supplied by tho mercantile classes, consisted in furnishing means and material to the miner, for the prosecution of necessary works—as food, ‘clothing, tools, and other commodities and , 'conveniences ; these to he repaid to the lender out of the proceeds of tho mines. So abundant was the commercial capital appropriated to trading purposes on tho gold-fields, that, while the opinion provailed that the productiveness of the mines remained unimpaired, and scope existed for I the extension of the workings, no difficulty I was experienced by the miner in rendering | available for his use the capital and credit of the commercial public, i This capital, advanced in the ordinary way of buying and selling, and without the formality of a loan, was refunded by the borrower, in the price charged for com moditics supplied to him, and this necessarily augmented their price, the increase being the refund of the capital advanced on the credit of mining laho l- with interest, i This system of credit, at first necessary, was soon found to he so commodious that it has continued to- the present time; when 1 i sufficiently long-period has olapsod, and

the productiveness of the gold-working licen so great, that its longer continuance might not seem to be necessary. But the fundamental economic law respecting capital applied to purposes of productive industry requires, that it do not perish in the using, but be recreated ami returned to its original source. And it is the operation of this law, the refund of capital invested in mining, and the restoration thereby of commercial equilibrium, that is the proximate cause of the existing impecuniosity. The wave which bore upon its crest to new regions of the earth, the products of the skill and industry, the powers and resources of the older civilizations, is now hy natural equilibrium returning to its source, laden with the treasurers of the shores its inundation has fertilized. This is the cause secretly operating, which has occasioned the depression or stagna ion observable. It is aggravated by the recoil consequent on the exercise of an tinjudiciously extended credit j which, though it has been pro luctive, incidentally of some advantage, has also been instrumental in wasting a great amount of labor in- unprofitable enterprises and causing the absorption and annihilation of a large amount of capital advanced to sustain them. It ban now become an imperative necessity that the credit system of the gold-fields bo restricted in its operations, that capital be not extinguished by the misdirected application of labor to unprofitable enterprises iu affording facilities for perpetuating improvident habits among the mining communities, and keeping up an artificial scale of wages and prices detrimental to the general welfare. Yours, &c., • AGE ICOLA,