The Lyttelton Times. THURSDAY, APRIL 14, 1892.

Lyttelton Times, Volume LXXVII, Issue 9700, 14 April 1892, Page 4

The Lyttelton Times. THURSDAY, APRIL 14, 1892.

The withdrawal of capital has been the theme of writers more lugubrious than excited, and less fair than political in their leanings. With, the best political intention they have been trying for months to perform the disreputable exploit of destroying the public credit of this Colony. The first attempt was very nearly successful. Capitalists at the other end of the world were terribly put about. But the capitalist is after all a most reasonable person ; one who likes to make for himself an opinion founded ou facts of his own observation and reasons drawn from his own inferences, rather than at the dictation of others. The capitalist, in short, likes to do that which Mr Grigg, of Longbeacb, thought so highly criminal in Lord Onslow as to be worthy of punishment by ostracism; he likes to think for himself after hearing everybody and reading everything. And fortunately the capitalist who is engaged—we use the term in its widest collective sense —in the affairs of New Zealand has had a great deal to read and a great deal to listen to. Li rat came Mr Perceval’s demolition of the Times' articles, which the famous journal received in the spirit of meekness which should accompany all Christian reception of well-merited castigation. The silence of the Times has been the most eloquent testimony for the reassurance of the capitalist. Then Lord Onslow, who was always known in London as a man of most sensible mind and high independence of judgment, a reputation he has since added to by his efforts to push the best interests of the Colony, bore that testimony which all the world, financial and Colonial, with the solitary exception of Mr Grigg, liked so much. After that came Mr Glyn, who told the Bank of New Zealand shareholders that this splendid Colony, which produces so much and exports ten millions’ worth in the year, is a far better land in which to invest money than any other under the Southern Cross. He said very little about the legislation, or the freaks of legislators, or the “ want of finality,” or any of the other bugbears ’set up by the Opposition, legitimately in debate, illegitimately outside the walls of Parliament. What he did say was that the legislation would not, in his opinion, affect the position of capital in any way whatever.

After Mr Q-lyn, the Chairman of the Australian Mortgage Company said good things of New Zealand. Before that Mr Battley had raised a by no means uncertain voice against the alleged panic of capital. Together with all this testimony was the extraordinary, leading case of the New Zealand and Eiver Plate Land Mortgage Company. We have pointed out how three years before the new legislation, during the slumbering security of the apparently permanent Property tax, the Directors of that Company told their shareholders that they had found out how the increase of prosperity in New Zealand had given to the landowners of that Colony a strength of independence which enabled them to insist; on lower rates of interest for the advances upon their securities of proved soundness. Bowing to fate, they had determined to go to the Plate country, where nine or ten per cent were cheerfully given by borrowers, who were, owing to a variety of circumstances, not quite so independent as the borrowers of New Zealand. The shareholders accepted this advice, they authorised the Directors to act, and the Directors reduced their New Zealand advances from <£900,000 to .£342,000. It is almost incredible, but it is a fact that certain Opposition organs have actually quoted the opinions of a Director of this Company fulminating against a taxation which was not heard of until the Company had taken away more than half a million in obedience to other causes altogether. The true commentary on this case of the Plate Company is that the falling rate of interest, consequent on the rising independence of the New Zealand producer, is making the business of investing debenture money in New Zealand daily more difficult. The corroboration of this view has recently been supplied by the Mutual Assurance Association of Australasia. The Manager, Mr Re min gton, whose financial capacity and sterling judgment will be readily recognised, told his shareholders the other day that he and the Directors recognised that interest was falling in this and the other Colonies; and that they had in recognition of the important fact based upon it the conduct of their loan policy, which is such a powerful factor in the successful result of their business. It is, of course, well known that a goodly proportion of this Company’s loan money reaches this country and finds investment. Evidentlyj-tho Company is-not afraid

of the new legislation, it does not consider that capital is being frightened, discouraged and driven, forth of malice prepense. On the contrary, it comes across the Tasman Sea with its capital, and invests It with a great pleasure, by no means diminished by the thought of the new legislation.and its terrible effects. Then do we mean to be understood as declaring that no capital has been withdrawn from this Colony, and that there is no disgust among the financial people at all ? By no means. Our line of argument necessarily admits that some capital has gone, and that some capital has been prevented from coming, but that the fact is largely due to the difficulty imposed on vicarious lending by the fall in the rate of interest, which has been pro* duced by the increased independence of the New Zealand producer. It is not the capitalist (in a collective sense) who is in a panic, but the middleman, who is not in any sense a capitalist at all, and his panic is very real, very well founded, and will be probably followed by a large mortality (financially speaking) in the ranks of his class. Individual capitalists also are no doubt alarmed, and they are withdrawing on account of the new legislation, as they very truthfully explain to their unhappy agents, who lament in secret the loss of their commissions, while they fulminate against the new legislation. the best thing for the agents to do is to persuade their principals that in spite of the new legislation they may go farther and fare worse. Why, only the other day. Colonel G-orton, a competent colonist much mixed up with northern pastoral interests, just returned from the Old Country, told an interviewer (in an Opposition paper of course) that the scare among capitalists is due not so much to the new legislation as to the prominence given to the fact that mortgages have to pay taxation. But the leading fact in the situation is that mortgages have always had to pay. We advise the middlemen among us to take up the independent position of masters, not the dependent position of servants. By advising their principals to trust the new legislation and keep their money here for investment they will continue to draw their commissions, and they will keep a portion of the capital now taking flight in the country. It matters, however, more to them “than to the country.