THE LAND REVENUES.

Press, Volume II, Issue 49, 19 April 1862, Page 1

THE LAND REVENUES.

j t (, e estimates of revenues for the current year which tbe Government laid before the last session of the Provincial Council, the receipts from the sales of land were put down at £60,000. This sum was accepted by the Council as a reasonable one upon vhich to base the expenditure. Six montha of the year have elapsed, and the sum already realized is 'somewhere about double that which it was anticipated twelve months would produce. Before the session bd ended it was well known that the £00,000 would be enormously exceeded, and the knowledge was expressed in a ready aud rollicking method of vi'tin" everything which everybody asked, without

cure or enquiry

Prudent minds are however beginning to look a-head, and to ask : What is to come of all this ? Visions of the past rise before them. The disasters of 1859 have not been forgotten; and though Bill 'Barnes has subsided, we believe, into the comfortable position of a Government contractor, his name is hazily remembered in the history of that year as a sort of Wat Tyler or Jack Cade of Canterbury.

Let not our readers imagine we are again about to enter the gloomy regions of " Circulating Medium." Prophecies after the event are seldom very interesting, and never amusing. We are now about to assume the more critical and dangerous character of a prophet before the event. Not indeed to take a very lofty flight—not to walk on the highest rope: — that we leave, out of respect, for the chief magistrate; and when our financial Blondin assures us that " all the land between tbe Rangitata and the Waimakiriri will be sold in the next two years," we listen in respectful wonder : while we do not venture to contradict, we mutter to ourselves, Heaven forbid !

But however we may discuss these questions so as to suit our own party views, the maxims of economical science remain unchanged, and will vindicate themselves. And no law in that science is more clearly established than this : that, if money be withdrawn from the ordinary occupations of commerce and invested in permanent securities, monetary difficulties will speedily and inevitably follow. This is true when the investments are of a nature to pay some small interest on the capital invested; it is a fortiori true when the investments are such that no interest whatever is returned.

We have little doubt that, should the laud sales continue much longer at their present rate, a very severe financial crisis will overtake this province. A •cry considerable part of the money recently paid •-to the Land Board has, we know, been of the nature of imported capital. Capital imported for the purpose of investment in land will not in any degree derange the money market, or affect the prosperity of tlle touQtry. But of late the sales have begun to I'bange their character. The runholders have been alai'ined b . v th e rapid purchases of land by foreign 'P ! aiists, and are now straining every nerve to save N»eir runs from the waves of the golden tide which is jetting f rom Australia. The consequence is, that of a*, multitudes of purchases are being made with •wowed capital. The money derived from sales of Wo °* is being expended in land; and we believe that m ° n[ y the coming year's clip, but the clip of the • Mter, -.« being mortgaged for the sake of g the run. This pernicious struggle for land toll- not lOUg (>on(ine itself t0 one c * ass - Speculators one another like sheep; and the mania is ' 5 spreading to the lower classes of financial locietv.

The only money which can possibly be invested in waste lands without checking the prosperity of the country, is that sum which is annually created out of the trade and industry of the country, and is added to its capital. If a man has one hundred pounds invested in the current expenses of his trade, in wages, and insurances, and so on, in any one year, and if next year he has two hundred pounds in hand, he can safely invest one hundred in land, and continue his trade as before; but if in the second year betakes £150 and invests it in land from which he gets no immediate return, what becomes of his business ? He is compelled to carry it on with insufficient capital, and ruin or great difficulty is the result. What he then does is to go to the Bank and ask it to see him through the difficulty. He represents to the Bank that he wants accommodation in his legitimate trade; but if the whole transaction were displayed and balanced, it would appear that what he really wants is that the banks shall lend him money with which to pay for his land.

Now we should very much like to interrogate the banks as to -what sort of business they are doing just at present. Do they find that the demand for money is increasing as the land sales go on increasing? We believe this would be found on enquiry to be the case. And if it be so, we earnestly hope that the managers of all the banks jwill begin in time to exercise a proper caution, so )&s to avert the consequences of a crash which cannot lqng be delayed. This community now enjoys the advantages of three banks instead of, as upon the last occasion of a crisis, only one. There are great advantages derived from competition in banking, but there are also great disadvantages: and one is, that the power of foreseeing an impending crisis, and of averting it by timely prudence, is greatly diminished.. When all the paper in the country goes through one hand, the character of the trade of the place displays itself; but where a multitude of banks are each ignorant of what the others are doing, no such check can be applied. How far the public have received increased accommodation, we shall see when the returns of all the banks come to be published next month. As we formerly said, the public has no doubt received some accomodation in the shape of lower interest for overdrafts, and higher interest on deposits. But this may be overdone; facilities for the sake of gaining trade may be offered, which cannot be afforded without loss to the bank. do not think it a public benefit that the free competition which exists in other trades should be introduced into banking; and we therefore very greatly doubt the wisdom of the plan lately adopted by Government, and imitated by the Municipal bodies, of putting up their deposit accounts to auction amongst the three banks. Experience shows that the bank with least capital, and least connection and business, will generally offer the most favorable terms. The Union Bank of Australia divided 14 per cent to its shareholders the other day in London as the profit of the past year. It is admitted that the Union Bank is conducted with the greatest economy, not to say parsimony. It has, we believe, the largest business of any bank in the southern seas ; at all events nearly so. Now 14 per cent is not a very large profit to make in an investment necessarily precarious, the profits of which all depend on skilful management, and in countries where the interest on money invested in mortgage or real property is as high as from eight to twelve per cent:

and yet, of all the tenders which have recently been sent in, the tender of the Union Bank has been the least

favourable. It is not very intelligible to us, if the Union Bank can only realize 14 per cent on its capital borrowing money deposited at from two or three per cent, how banks with much less capital and a much more limited business can advantageously borrow money at a much higher rate of interest. But the thing we would now dwell upon is, that the competition between the banks will more or lees tend to stimulate the over trading which is the vice of all colonies, and which invariably brings its disastrous fruits along with it.

But it is not only the Banks which demand caution. The conduct of Government is of still more importance. The Government conducts a business by far the largest in the country. It is by far the largest employer of labour. The action of the Government, therefore, is most felt on the community. The Treasurer, if he looks at his books with the eye of a financier, and not a clerk, can tell as well as the trader what is the tendency of the country ; and can be taught prudence or the contrary accordingly. Whatever else the Government do, we certainly hope that they will keep a large balance in the cheßt for the next six or eight months, and that they will make up their minds beforehand, how they are going to raise temporary means in the event of a severe call on their resources. We hope that they will not, as before, be compelled to discharge labourers at the very moment when they ought to be putting them on, or be obliged to draw fast their purse strings when they ought to begin to unloQßft-tlt'W* Is the New Zealand Bank prepared to allow the Government to overdraw its account some £25,000 or £30,000, as the Union Bank did three years ago ?

We are no croakers. We have the same faith in the resources of this place as the most sanguine of our neighbours: but we have watched the f{ow and ebb of the tide if national prosperity in other colonies, and we look to like causes producing like results. We are certain that it now rests with the Banks and the Government, to plunge this Province again into a state of financial difficulty, or to maintain its present wonderful prosperity unimpaired. We foresee that the landsales may be stimulated for a few months longer; in which case collapse will ensue ; or may be limited to a rate which the country can bear without withdrawing its capital from other demands. The extent to which land sales can be safely carried on, is limited by the imported capital, plus the annual savings, of the country. The whole of such capital may be invested continually, but we think that at present that limit is being exceeded, and the working capital of the country being drawn upon; Time will Bhow.