The Waikato Times. TUESDAY, NOVEMBER 5, 1878.

Waikato Times, Volume XII, Issue 994, 5 November 1878, Page 2

The Waikato Times.

TUESDAY, NOVEMBER 5, 1878.

Equal and exact justice to alLmen, Of whatever state or persuasion, religious or Tjolitical. •*# * * * Here shall the Press the People's right maintaiu, ; Uhawed by influsnoo and unbribed by gain.

The ' Sydney Morniug Herald ' has sought to connect land transactions m xJew Zealand with the fail are of the Glasgow Pank, and to read the colony a lesson on the character of its speculations, especially m land. It refers to the Public Works Policy of Sir Julius Yogel, as the commencement of an era of advanced speculation which, commenced by the Government of the country, dovelopei itself m the action of individuals, and found for its chief field the acquisition of land to which the introduction of population and wealth, and the undertaking of large public works, would naturally give increased value. "To find the capital," says the ' Sydney Herald,' of which the colony itself had no surplus, Anglo- Australasian companies have been formed. This process is legitimate enough, provided that those who invest have really the capital to spare, and can afford to wait till the return comes ; but the case is different when those who invest are simply speculators using other people's money, on which they must pay an interest while waiting for their own profits ; and the case is still worse when the money so borrowed is bank capital. It is an axiom among prudent bankers that the money which they employ should never be committed to long engagements ', bank capital should be m constant movement and circulation. A bank is not an investment company, which puts out money to interest on permanent securities, or makes speculative purchases on the hope of a re -sale at large prefifcs. And it comes practically to the same thing, whether the bank carries on its business by itself, or allows its capital to be absorbed by customers, who cannot refund it at a moderate notice. In either case the capital of a bank, which ought to be constantly going out and coming m, is fixed m a practically irredeemable investment. If a Bank lends to a colonial land company a large proportion of its capital, and that capital is sent out to the colony and invested speculatively m land m the hope of a rise, it is obvious that the money cannot be quickly reclaimed, if the Bank fchould require it for more legitimate purposes, nor even if it should need it to save itself from ruin. The facts of the case are not substantially altered because Hie forms of bauking may be preserved, and all advances may be made under bills. If it is necessary to. have the bill renewed, and if it is understood that the bill will be renewed, then the advance is practically a tnort. g-age, a&'i c Bank has so far transformed itself into an investment company, borrowing from customers at short dates', ftttd lending to speculators on long dates— a course of action which may be profitable for a long 1 while, but which always has within it the element of danger. We gather from the telegram that, m order to save itself, the Glasgow Bank tried hard to transfer its New Zealand securities, bat failed ; this implies that it would have submitted to a great loss* to get quit of that burden. This is only another -way of saying that ifc made laeg-e bub risky profits for a term of years, , only to be willing to throw them all away, and more — at one stroke. If it could have saved itself by throwing this dangerous account overboard, it would have been a loser on fche whole transaction. Beinjj unable to do so, it has sunk, and its wreck has made a widespread desolation." So much for the ' ISydnev Morning Herald/ Granted the premisses, we fail to

see that the result is either bknieworth^ojc: .likely to be embarrassing |a|^d,X#2ealand. The policy of the Glasgow Bank is alone to blame, andj|we may feel sure that the individual bofijpwers withiu the colony are^sectt|ea against immediate pres^irejswliile the security on which they borrowed being sound ami ample they have little need of concern for the future day of reckoning. The several Mortgage Associations doing business with the South of New Zealand, to which part of the Colony the strictures of the ' Sydney Herald,' and these remarks more pointedly apply, are said to be largely supported by Scottish capital, butit must be remenibered the transactions m whichj such; associations deal are not deposits- atifaight, but made for specified times, and over a term of years, mid can only be called m as they fall due. " The worst that may happen is the very probable' increased caution which may be exercised by capitalist speculators m entering on new transactions of a similar nature, and a consequent hardening- of the money market for 1 a particular kind of investment. As regards the primary security itself — the land, — that has been fully proved, by the most indisputable statistics, to be beyond doubt ample and assured. The lands of the colony have been purchased for bona fide settlement and use, and therein lies the whole gist of the matter. They have not been invested m simply for a rise, the purchaser paying interest out of borrowed capital, and wholly dependant on some extraneous circumstance or action of the Government for an increased value to enable him to realise, but the purchasers are literally discbunting the richness of the soil m wool and grain and other, produce, and liberally and punctually is the land meeting its liabilities. We can readily understand that, from an Australian point of view, the rapidly - rising price of land m New Zeilaud, associated no doubt, and justly so, as it is with the Public Works 'policy of 1870 is looked upon with distrust and suspicion. The Australian critic cannot realise the true bearing which that Policy has had, and now haß upon the settlement and value oi land m this Colony. The Public Works Policy did not beget the present value of New Zealand land, It has been simply aucillary tc its development. The value of the land was there — the policy was simply needed to enable the colonists to utilise it to the fullest. That value has not resulted from so much floating capital being circulated m tht colony by means of borrowed millions spent m public works and immigration. A fictitious prosperity such as that would, before now have at least shown signs of collapse if it had not indeed collapsed, a3 "in the North Island m 1863 and 1864 the war expenditure when it ceased brought with its close the downfall of city properties, inflated to a degree which their practical use could not maintain. . The money introduced by the Public Works Policy has done something more than this, It has been, to a very large extent, indeed, despite much unfortunate waste, spent by the Government m improwng 1 and developing the lands of the colony just its a larg-e landowner might have borrowed money to drain and fence and clear his property and add to its intrinsic value, its powers of production, And here again the Australian crhic cannot grasp the situation. He cannot, understand the real value ol New Zealand soil, which can only be measured by the relative cost ol tillage and power of production. To enter upon this phase of the question now, would be; too tax upon our space, and,} for Ihe, matter of that, the information, ws could afford must be still fresh m the memory of our readers. We showed on a recent occasion,' from statistics quoted by Sir Julius Yogel, that New Zealand produces a higher average of cereals 'lmn any other country m the world, with the exception of Belgium and Holland ; that, with all the accessories of science and capital, the average growth of wheat per acre m England is less than it i 3 m New Zealand ; that the average of the great wheatgrowing colony of South Australia is little more than a third that of New Zealand. These facts take the high prices paid for land m New Zealand, as compared with that given for land m other colonies, out of the category of merp speculation, and i ho strictures of t T Je 'Sydney Morning Herald,' and the warning it inculcates, fall harmless as applied to this colony.