THE PRICE OF LAND CANNOT BE FIXED BY AUCTION.

Auckland Times, Volume 1, Issue 5, 19 September 1842, Page 3

THE PRICE OF LAND CANNOT BE FIXED BY AUCTION.

(From the Colonial Gazette, March 16 ) A dogma of which official economists are most tenacious is, that it is belter to sell land by auction than at a fixed piice, because it realize® more money : and so far. in tespect to the mere accumulation of cash in the Government coffers it may be an advantage. It is however, a very trifling advantage to either colonv or mother-country ; and the disadvantages are likely to become so apparent as to convince even the bigots of office. The town of Auckland, the official settlement in New Zealand, is scarcely marked out for a town before it furnishes one of the strongest instances ever given of the peculiar evils resulting from sale by auction. The advantages were realized to the utmost extent; the prices obtained for land were many hundred fold greater than any price which would be fixed in New Zealand; the case is as favourable I or the advocates of sale by auction as it could be. The average price paid was £569 per acre for town lands, the highest £I6OO. Now, what is the town of Auckland, that its land should possess such inordinate value! Where is the dense population, where the accumulated capital, the restricted cho ce of land ? It is objected to the use of a uniform price, that the first purchaser buys bis land for a low sum, and then clears a large surplus by jobbing re-sales : but what jobbery can exceed this at Auckland with the auction system ! Government even practised the trick of “ buying in ;” that is, there was iaad put up for sale at so high a price—a price so utterly beyond the scope of present speculation at Auckland—that it did not find purchasers: the upset price of that land was £2 ; but then it was in allotments suited to small farms. Now mark that extraordinary distinction ; little patches of land sold for sums which in the Australian colonies would purchase hundreds of acres; while for larger patches of identically the same land no one would pay £2 an acre. The land, then, was not bought to be used as land is used ; it was bought merely as the site of the purchaser’s dwelling, or as the material for future speculation. Government entered upon the district and, choosing to mark out a very small portion for a town, it is said to the colonists, if this is made a town by and by, what will you give me now for the chance of the price which may hereafter obtain in the unbuilt city ? To the excitement produced by that appeal was added the stimulus of competition. One purchaser, we see, bought a little piece of land at the rate of £20,000 an acre. Various motives may have suggested an outlay which seems so extravagant. We can fancy one, which is not to be assumed in the particular instance, but which might work yet greater extravagance in the rate paid for land; the purchaser of land for resale would derive an obvious advantage from raising the maximum price paid in the market as a bait for secondary purchasers, the quantity of the land bought at the rate being a minor consideration; the speculator might be willing to lay out £SOO in manufacturing the bait; and if he could manage it with due caution and disguise, it

wpuld of course answer the purpose better if he only obtained four perches far his £SOO instead of eight, for the less the land the higher the of the purchase-money. One can well imagine the influence of such a stimulous to other purchasers at an auction taking the hint. What is all this but gambling! What return have the purchasers of Auckland lands obtained for their money ! So much land, and the chance of land rising to an exorbitant price within a short time; it is equivalent to betting on the progress of Auckland, Yet sale by auction is recommended as a preventive of gambling. But, omitting the consideration that the system encourages a civil vice, there are other questions to be raised as to the expediency of exacting such large payments fiom the purchaser of lands. Who is to benefit from the accumulation of such sums? Here, in Auckland, we see a few hundred persons, a few acres of land appropriated, and many thousand pounds paid into the hands of Government by those few persons for the few acres. What has been done towards the progress of the colony ! The capital brought into it, or at least a very large portion of it, lias been put in train to be sent back to England : a premium has been placed on the congregation of capitalists on the site of a small unbuilt town, to the neglect of the land’s culture; and the speculators and their dependents are induced to live there on the remainder of their capital, to drain the last dregs of profit from that idle source, until it is exhausted, and they jye driven, with shattered means and distracted thoughts, to till the land—unless ruin has finished their career. Under this aspect, indeed, these sales by auction bid fair to exasperate kindred evils which have been experienced at Adelaide. Nor are the capitalists the only victims to the folly in which they join ; the flow of cash, the personal wants of the speculators, and the commencement of works for the purpose of carrying on the speculation, promote high wages; labourers are drawn to the spot, and there is a general intoxication of “ prosperity.” By this time the original speculators have pocketed their cash, and have possibly left the place: the last, purchasers on speculation find the process of re-sales exhausted ; they have bought their land for more than it is really worth at the moment: they can no longer live upon their means, and they have no longer the means to obtain any other kind of livelihood ; the works of “ prosperity” have ceased, and the labourers find themselves suddenly transferred to a premature age of “ decline and fall the dismay, and even the positive reaction, are great in proportion to the height of the “ prosperity,” for confidence has the ground swept from under it, and in the panic cowards aggravate the danger by hurried attempts to escape by flight. It is the professed object of sale by auction, to obtain the highest price possible for land; and it will thus raise to the highest possible point the pros-perity-prices, which are to increase the momentum and depth of the subsequent depression. If the excuse may avail for grave statesmen, they have been misled by some specious appearances. To obtain a large fund may seem most advisable, when that fund is to be used for proper objects; but, in the very act of obtaining that fund, Government, with the stamp of authority, seems to determine value. The unreasoning multitude accept as a reality the Government price for land as the index of the vaiue of land; whereas it has nothing to do with it—no common law. If the Government could exact large sums of money from landowners without seeming at the same time to set a specific value on the land, the mischief would not be so great; but that is impossible, so long as the Government exaction is called a “price.” If Government want money for general purposes, let them procure it by the legitimate means—taxation so called. There would, however, be much use in their pointing out the value of the land, if they took proper means to do so wiih some approach to accuracy; but then, they must proceed upon principles more fixed than the caprices and heated competition of an auction-room. If you view the subject in its broadest light, these seem to be the principles which must determine the price of land. In all countries whatsoever, there will be three elements in the value of the soil—its own productive power, the power of the labour bestowed upon it, and the amount of the capital available to the cultivator; a colony, rightly considered, is an extention of the parent land, and its land must be of equal value with land of similar quality at home; were it literally annexed to the frontier of the mother country, it would be, cceteris partiims, literally of an equal piice with all tne rest; but being at a distance, the money price in the first instance must be less by the amount which the transit costs, with some other deductions of an analogous nature. But, subject to those deductions, the price of land in the colony will be the same as the price ot land in the mother country ; that abstract price, therefore, will form a level, below which, and but seldom obove, the actual piice to be paid for colonial land should oscillate. Now, within the year, we have seen land in an obscure quarter of New Zealand jump from no piice at all, or a few shillings per acre, to £570, £1,600, or £20,000. With the index-point just given, it is perceived at once that the one extreme is as absurd as the other, and that a system which admits of ei.her, is worthless. Another fallacy arising from a confusion of terms, and consequently of ideas, is caused by calling a colony a “ new” country. The soil is newly occupied ; as an inhabited countiy the place may be said to be new, but the labour and the capital, which are conveyed to it, are as old as those of the mother country. In respect to two of the three elements of wealth, therefore, it is an old country. The effects of the mistake are practical. A really new country —that is, a site newly peopled, by a race possessing merely infant institutions and intelligence, aud only the seeds of capital—is beyond the scope of our legislation; our colonies are not of that class or we might despair of regulating the appropriation of land, were there any need to do so ; we might suffer society to begin with land at no price at all, or to barter house and home for a whim and a choice scrap of land. But, with our old people and old capital transferred to the unoccupied land, our object should be to let them start at their new site in all useful respects from that point of advancement which we have already gained. In our economical system one very great regulator is the value of land—deiange that, and every thing will fall into disorder; but inasmuch as our colony must subsist as an integral portion of the empire, one of our first objects of solicitude should be to secuie that the value of land is placed upon as true a level as possible with that of the mother country. How to ascertain that relative value! That is a task for the legislator ; but it appears to be one that must be accomplished, in some degree, before any sound practical system of the disposal of waste lands can be determined. At all events, sale by auction will not do it. The only value of that system, in fact, is for individual dealings out of the regular line; it strikes a prompt if rude balance between the necessity of the vendor to sell, and the desire oj the buyer to purchase ; it has little bearing upon the value of the article sold ; and no substantive power of determining the proportions of the elements of national wealth. It is the resort of the idle and ignorant legislator.