THE Wairarapa Age MORNING DAILY. THURSDAY, MAY 13, 1909. WHY CAPITAL IS SCARCE.

Wairarapa Age, Volume XXXII, Issue 3188, 13 May 1909, Page 4

THE Wairarapa Age MORNING DAILY. THURSDAY, MAY 13, 1909. WHY CAPITAL IS SCARCE.

It will be remembered that in his recant speech at Invercargiil Sir Joseph Ward gave utterance to a rather naive expression of surprise that while large sums were sent to New Zealand for investment when interest was ruling at 4£ per cent., there is a difficulty in obtaining money now from outside when investors are getting as much as 7 per cent. There is no mystery at all about this phenomenon to anyone who studies the facts with an open mind. The simple explanation is that for some years we have been legislating in such a way as not only to discourage capital from coming into the Dominion, but even to encourage : its being sent out of the country. Referring editorially to the scarcity j of capital the Christchureh "Press" says:—"lt has already been axplained in these columns how the establishment of the Advances to Settlers Department helped to bring about the very evil—that of dear money—which it was designed to prevent. Very soon after it was known that the Government was setting up a Department which proposed to lend money at 41 percent,

no matter what the market rate might be, two or three large loan and investment companies closed up operations in New Zealand. This meant not only the withdrawal of their own capital, but of other money which they were able to raise in England for the purpose of lending it in the Dominion. The benefit of these companies was especially felt in times like the present. They provided a species of conduit through which money flowed from th« Old World to supply the extra demand that might arise in New Zealand. We have not only cut off this source of supply, but it is now extremely difficult to get private investors in the Old Country to send out money to be invested iu these islands. Their unwillingness and distrust are due not only to a natural disinclination to enter into competition with a Government Lending Department, but to the predatory character of much of our legislation. They know that a determined attack has been made upon the freehold, and that the posses-

sion of land, except in limited areas, is treated very much as if it were a crime. Is it likely, therefore, that in these circumstances they will care to send their money twelve thousand miles to the other side of the world, for the purpose of advancing it upon the land?" That our industrial legislation is also looked upon with some uneasiness is perfectly well known. Sir Joseph Ward's announcement that the ■ Government intend to go in for a heavy increase of the death duties is hardly likely to produce a reassuring effect, since it will no doubt be taken as a further proof of an inclination in New Zealand to make a dead set at capital.