THE Evening Star. WEDNESDAY, OCTOBER 13, 1869.

Evening Star, Volume VII, Issue 2009, 13 October 1869, Page 2

THE Evening Star. WEDNESDAY, OCTOBER 13, 1869.

The game Jit speculation that has been played at Auckland for some months, has at length assumed another phase, and shares are down. The sifting process must now begin, and the honafide companies alone will stand the test. The misfortune is, that when under such circumstances, the house of cards falls, not only do the worthless come to grief, but those which are really valuable suffer, and shares in them fall as much below their real value, aa they unduly advanced during the excitement. These are natural and obvious consequences of such unhealthy scheming. That which properly conducted

would have tended to tbe rapid and permanent prosperity of Auckland, will now so far depress mining as for a while to produce comparative stagnation, and the progress of development will in some degree be retarded. We are glad that Dunedin has been so far remgved from the scene of this gambling, as to have comparatively escaped the excitement and consequent loss —for loss there must have been to hundreds—perhaps thousands. It is one of cha peculiarities of a speculative mania, that the immense profits made by individuals are blazoned abroad as baits to induce the sanguine to venture, in order that they too may receive a portion of the rich feast spread before them. But in a lottery where there are so many blanks and so few prizes, the many combine to enrich classes who fatten upon speculation itself—men whose only employments are those of giving form and shape to bubble schemes, floating the scrip, calling it capital, and passing it backward and forward from hand to hand. Like bankers at a gaming table, they commonly get rich. Careful to avoid becoming too deeply involved in doubtful companies themselves, they lend their name and talents to others irrespective of who wins or who loses. They play a cautious game, and when those who are plucked look back with regret at the unreasoning manner in which they have allowed themselves to be gulled, they, as a rule, can scarcely bring a charge against those who have been the agents-through whom their worthless scrip was purchased. But yet there is blame somewhere. It may be conceded that those who are losers and those who are ruined, aro themselves to a great extent in fault. Some may say there was every opportunity through their mostly being on the spot, or near it, of gaining correct information of the value of the claims proposed to be worked. This is only partially true. Men who have other avocations cannot afford time to investigate the soundness or unsoundness of every project laid before them ; nor can they estimate the value of shares by any other process than what Adam Smith terms, “ The haggling of the market.” Men must rely upon one another to a certain extent in the various transactions of life, and it is the abuse of this necessary faith in each other’s integrity that is the sin of share manias. Because of the known tendency on the part of unprincipled men to make capital of the good faith of the honorable and trusting, laws have been made with the professed intention of checking it, and of guarding against it. But even these are set at defiance, and instead of conducing to protection, they are made to minister to the art of swindling. There cannot be a better illustration of this truth than is afforded by a study of the New Zealaiul Gazette, TJndor the Act it is necessary that a specified proportion of capital shall be paid up, before the companies can be registered. We have more than once pointed out that the number of companies gazetted represent, capital to the amount of millions. The least consideration given to the subject would show that it is impossible that even the whole population J of New Zealand could spare the capital from the every day necessities of trade to contribute to the establishment of these companies, were what is represented in the Gazette true. But the Government organ declares that the amounts are “paid up.” Thus that which was intended to save men from being deceived, is made the means of misrepresentation, and the Government is made to foster gigantic swindles, tending to bring the Colony itself into disrepute. One could have thought the Northern papers would have been among the first to sound the note of warning, but so far we do not find they have complained. Possibly, like many others, they are not quick to discern what passes under their noses, although keen sighted enough to see the defects of distant prospects. It is not sufficient to say that Auckland will not ultimately suffer from this bubble bursting. Nothing is more evident than that when there are such deposits, time only is required for their development, although strangely enough the known wealth of Otago has been, forsaken for the speculative uncertainties of other Provinces, That which wo desire to evolve from this experience is, That a law which affords its aid to such swindles as have been perpetrated in Auckland is either in itself defective or is so badly administered a« to render strict investigation on the part of the Government imperative. The clauses requiring that a certain portion of capital should be paid up, was intended to be a safeguard to investors. Its object was to give some security to those prepared to l>ecome shareholders, against misrepresentation on the part of the promoters of companies. But when taking hold of this provision, men are allowed to declare that a certain amount of capital is “ paid up,” when not more than the smallest fraction of it has actually been subscribed, instead of proving a protection, the

very law itself becomes a snare,, and the Government by its lax administeation of it are parties to the swindle.