THE TRUE CAUSE OF THE "TIGHTNESS."

Clutha Leader, Volume XX, Issue 1024, 9 March 1894, Page 6

THE TRUE CAUSE OF THE "TIGHTNESS."

• TO THE EDITOB.

Sir, —You commence your leading article in last week's issue of Leader on " the tightness of the money market " by quoting from a speech delivered by the Premier at Foxton a short time ago, in which he says that this tightness is to be attributed to the action of the banks trading in this Colony in curtailing their advances and sending the money over to Australia. After ably criticising the remedies suggested by the Premier, you conclude by stating that the banks hold some L15,000,000 of deposits, and regret that the depositors lack the push and energy to use the capital themselves in starting industries, etc., instead of leaving the doing so to those who, from want of capital, are compelled to borrow to do bo. Whether the Premier is correct in stating that the banks are sending money to Australia, or whether the true solution is that capital is being withdrawn by Home investors is not for me to discuss here, but the fact remains that capital is being withdrawn from New Zealand, and my object in writing is to state "the reason why." Now, Sir, in the face of recent legislation — for example the Labour Bills, the leasing of land in perpetuity, the uncertainty of security caused by the threat of bringing in a bill to nationalise the land — is it to be wondered at that those having capital at their command refuse to invest it in our Colony, but prefer to deposit it in banks in which they have faith, and leave these banks to invest it when and where they find the best and most remunerative investments. The banks hold these L15,000,000 on trust, and they too are frightened to advance monies to those engaged in industries in which labour has to be employed, knowing how few of them succeed in holding their own, much less in returning interest on capital invested. And then the banks object to freehold securities, having learned by past experience that advancing on a now Hquidatable security such as land is not their business, and partly because, in the view of past and present experiences, laud in New Zealand can no longer be looked upon as a first-class security. In a democratic country such 88 ours the people are the Government, and, with the overwhelming m'ajority the Government at present have, if they decided to-morrow to nationalise the land what would become of the investors' securities? Of course it may be said that they will not do so, but reading the future in the light of the past there is no telling what a country pledged to test all the advanced social reforms of the day may do. Personally I do not believe in railling against everything a Government does because I do not amee with it. " Uphold the right and down with the wrong'' is my motto, and I look upon our present system of party Government as contemptible in that a man of independent spirit going into Parliament is compelled to join one of the parties and to vote with the party he joins whether or not he agrees with it on the question at issue. But certainly the present Government are mainly responsible for the present financial position. They backed up the employee against the employer. They have bolstered up the rates' of wages by finding employment for the so-called unemployed at a higher rate of wages than farmers or those engaged in industries can afford to pay. They have also entered into competition in the land market by selling land to.day with all the facilities of roads, railways, telegraphic communication, etc., at a lower figure than it could have been bought at 30 years ago. "When the old settlers bought their land they had to pay down the price before they got possession, and if they had to borrow it was at the rate of from 8 to 12 per cent., and yet in spite of this and the alternation of good and bad times, and all the drawbacks unavoidable in starting in a new country, a large number have done well on their land. How different to-day. A would-be settler pays down no capital value, but holds it on a tenure equal to a freehold and only pays interest at the rate of 4 per cent, on capital value. The effect of this is not only to reduce the value of land as a security but also to reduce the value of the land held by the old settlers to a figure in accordance with that offered by the Government. Surely those who have capital at their command and landowners, be they large or small, must see that the present Government, in spite of alltheir protestations to the contrary, are deliberately opposed to their interests, and are playing into the hands of a class whose chief object is to obtain by fair means or foul a portion of what others have got, whether it be capital or laud. — lam, &c,

Old IpeiJxity.