A MODE TO INSURE EMIGRATION OF CAPITAL.

Nelson Examiner and New Zealand Chronicle, Volume I, Issue 31, 8 October 1842, Page 124

A MODE TO INSURE EMIGRATION OF CAPITAL.

There was published in the Colonial Gazette of the 4th of May last, an article from a correspondent on a most important subject, giving a sketch of " a mode to insure emigration of capital." We give an abstract of the matter. All the colonies suffer from want of capital — mostly those whose progress is most rapid. It has been assumed that in South Australia and New Zealand the certainty of a labour market and the maintenance of a market value for land would attract capital. It has, but not sufficiently. More would have followed, but the commercial public, tenacious of opinions once adopted, are the last to adopt. The system is doubted, opposed ; land, therefore, is bought — labour in proportion transmitted — capital goes with the labour ; but the further capital necessary to complete the process of settlement is withheld. Cannot the same machinery which secures the supply of the labour market be used to secure the supply of the capital market ? The Wakefield system would so restrict appropriation of land, that there should be hands to cultivate all the area settled, and* that there should be capital to cultivate all that is purchased. This last has been vainly endeavoured after under the free-grant system, by attempting to enforce a certain expenditure of capital. The Wakefield system would ascertain the settler's means by taking the round sum as purchase-money and handing it back in the shape of available labour. This tests his means partially — his disposition to use them" fflbt at all. A capitalist buys land now ; next year, or some other time, he will transmit capital to work . it. A portion of his capital is secured and spent. A piece is added to the settlement, and labourers, in proportion, to the population : the price of land is purposely high to prevent them from being prematurely landholders ; the system precludes squatting; and yet the landowner, whose capital under the name of purchasemoney has sent them out, sends nothing -JWth which to employ them : ergo, public works ; and the provision made for these, after all, is very limited. The case being thus, according to the theory of the system, the appropriation of land compared to capital supplied for employment of labour is excessive. By the same theory, all proceeds should go towards emigration. Now, as to capital, people are already in excess, though not as to land. By sending out more without further sale of land, they may exceed both land and capital. There is no proof that, with a due proportion of capital, the proportion of land and people would not do well : the immediate object, then, is to supply more capital without more people. Much has been said as to the definition of " sufficient price." The world are yet to seek for any standard whereby to estimate " sufficiency." "We have seen fiiat a price may be sufficient for one purpose — ' the restriction of appropriation of land to a due proportion with immigrant labour ; yet insufficient for another, viz., to restrict it to a due proportion with the immigration of capital. The intrinsic value of the land — that is, its productive power, combined Jtfith. the power of the mother country to place upon it the suitable amount of capital and labour — gives it its value in the home market : to that level it must come eventually ; how, then, to approach it nearest at once ? Colonial land sold at the price of home land would produce so large a fund as it would be inexpedient to expend wholly in emigration. How, then, employ the surplus? Mr. Wakefield's argument against aliena*tion of the proceeds from emigration purposes is twofold : first, that there is no security as to where the alienation shall stop; and, secondly, that if the price is greater than is required by the objects of its imposition (fit restriction on appropriation of land), and the surplus devoted to general expenditure, then the land purchaser is taxed for the benefit of the rest of the community. But, in the view now taken, to supply the capital market as well as the labour market, would be a legitimate application of the proceeds, and the return be as great to the purchaser. If so, the first objection is answered ; for the alienating authority would return all the proceeds to the purchaser, only, from its central position, it would determine what it should return in labour and what in capital, to keep the three elements of capital, labour, and land alienated in due proportion. Thus the price would test the purchaser's means": saying to him not only " Can you afford to pay so much for your land ?" but also " Can you place so much capital in the colony ?" As to the mode, we prefer to give the

writer's own words, lest, our view of his meaning should be, or appear, different from that of our readers. It will be seen that, to a certain extent, as regards expenditure of a part of the purchase-money in public works, the plan has been carried out in this settlement : whether to a sufficient extent, whether the amount sent out in capital does bear ,a due proportion to the land alienated and. the amount sent out in labour, our readers can judge ; also the idea of" loans to a larger amount than the original payment " is well worthy of consideration. " In all colonies where there is complaint of deficient capital, there is also a currency question — a contracted circulation. A plan' to enlarge the circulation upon a solid basis would be one to remove half the difficulties of .South Australia, to have prevented all the recent embarrassments of Sydney. The conveyance of private capital to the colonies is not altogether efficacious, for it flows out again: and there being no control, or but a slight and precarious one, over its influx or efflux, the colonists are sadly troubled in the intervals of abundance. Let us suppose, however — taking the figures merely for illustration — that the price per acre imposed under the modification suggested were £4, and that on an average £1 were expended on emigration, while £3 remained as capital to be conveyed to the colony : the £3 per acre would form a substantial metallic basis for a paper currency, which might be limited to the colony, by making it a legal tender there, but convertible in every part thereof. The return to the settler might be made in various ways : it might be made in the absolute payment of the same amount per acre as the computed proportion of the price devoted to the transfer of capital; it might be partly in such payment, and partly in loans, on real security, of greater extent than the original payment; or it might be partly expended in a fixed proportion in those public works which constitute an elementary want in new settlements. The account, for example, might stand thus : — Colonial Government in Account with Settler. Dr. Cr. To price of land £i By labour deposited in the To security on land .... 4 market £\ By roads, bridges, quays, &c. . . . ." 1 By payment in colonial notes 2 By loan secured on land. . 4 £S £S " The profit to the settler on this transaction is the use of the additional £4 over and above the profits derived in the direct trade of settlement. He absolutely purchases the advantage of a share in the labour market, in public works, a considerable amount of cash current in the colony, and the use of capital : the outlay on the part of the colony is only in the emigration of labour and in public works, both things of general advantage : the issue of colonial notes forms no charge upon her resources : the default in payment of the loans would cause the land to revert to the colony, and would leave it with no chance of loss. It might be advisable to lend money but to the amount of half the value of the land, in order to be sure that default would not strip the settler of his property. By the account above, the colonial issues are only double the amount of bullion, with the security of the land itself; without the loan, the issues would be only equal to the bullion ; in either case, as sound a basis for a currency a% could be. The regulating body in London would always be able to keep the due balance between the bullion and circulation within the colony, so, on the one hand, as not to have the notes at a discount, and on the other, not to run the risk of any pressure on the bank of issue. " The plan here suggested has this advantage over the ordinary machinery of loans, that it is based on cash transactions, and that it is carried out by a process which would fend to keep the capital in the colony. Its efficacy may be guessed by the single fact of the relief afforded in South Australia, when Governor Grey issued a " scrip " representing nothing but a debt ; its practicability by the paper currency at the Cape, also representing merely a debt. The scheme, however, is by no means offered as a matured plan, but rather to show the sort of tiling which is meant. Its general scope appears to comprise many desiderata; it enables the price of land to be raised without the (perhaps inexpedient) necessity of expending the entire proceeds- in emigration, and yet it gives security to the purchaser that the whole of the proceeds will revert to him ; it secures the emigration of capital as well as labour; it facilitates the growth of capital by means of loans wich incur no risk to the lender and no cost to the borrower; it provides a colonial currency on a sound and unquestionable basis ; it secures within limits the proportion of the currency to that basis and to the extent and wants of the community : it interposes no obstacles to, but rather helps, ordinary banking operations,- prompted as they might be by the more variable wants of the community. One objection to raising the price of land without carrying out more people is, that it would oblige the labourer to remain a longer time than necessary without becoming a landowner : but the plan proposes no undue restriction in the appropriation of land : it requires land to be kept, as it must, or the very labouring classes cannot prosper, in a proper ratio to capital; but it furnishes means for increased activity in the employment of labour, and a rapid interchange, which must countervail any difficulty arising from the enhancement of the original price — an enhancement which would probably obtain, at no very distant period, though things were left to take their course.