NEW LOAN COMPANY.

New Zealander, Volume XVII, Issue 1568, 27 April 1861, Page 6

NEW LOAN COMPANY.

[From the'• Sydney Herald.''] Some old colonists in England have just started a new Anglo-Australian Company, under the title of the Trust and Agency Company of Australasia. According to the terms of the prospectus, which has been forwarded to us, the chief source of profit that the Company proposes to itself is to be borrowed on debentures money at English rate of interest, and lend it out on mortgage at a colonial rate of interest. Its own paid up-capital, on the basis of which it will borrow, will be half a million. It differs from other investment companies already in existence inasmuch as it proposes to abstain from all speculative land purchases, and to employ its capital solely in lending, In addition to the loan business, however, it proposes to carry on agency operations of various scrts, such as to lend out money for English capitalists, to collect rents and dividends on Commision, and to transact the financial business of colonial Governments, municipalities, public bodies, and joint-stock companies, and to effect the sale in England of colonial securities of all sorts. There has been for some years established a Trust and Loan Company of Upper Canada, which lends English money in that colony, and pays a dividend of nearly twelve per cent, out of the profits on the transaction. There is also an Agency Company for the iame colony; which pays better still. The proposed company for Australasia is intended to combine the operations of both the Canadian companies, and its projectors count, therefore, on securing a corresponding prosperity. The operations of the Company are to be confiued in the first instance to Victoria, South Australia, and New Zealand. Why New South Wales should be omitted—whether because it is supposed we do not want money, or that we are not to be trusted, does not appear, but as the name of Alfred Dension is on the direction, it cannot be from an over sight. " The new system of transfer and registration of titles in these colonies" is alluded to as of great advantage in simplifying mortgages, and giving security to investments. The proprietors reckon a little too fast here. It is only in South Australia that this system is in existence. The present Government of Victoria, however has pledged itself to introduce the principles, and, under those circumstances, it will probably be carried. And then New South Wales may follow the example. The new land regulations are also expected, by the promoters of the company, to stimulate the demand for motgages. That will a good deal dejKjnd upon the way in which the question ot deferred payments is settled. If they are deferred indefinitely, the Government becomes the lender, and there is no room for the private capitalist to step in with any offer of his assistance. There can be no mortgage where there is no title, and there can be no title where, on account of the deferred payment, the Government has never issued the deeds. The free selectors, as a class, will not, therefore, be borrowers until they have completed there purchases. If the Government compels the final payment for the land within a fixed term, say three, or five, or seven years, then there would spring up a demand for mortgages, as many of the small settlers will not be able to pay up the balance without assistance. It is very probable, however, that the new laws may stimulate a good deal of underhand land speculation on the part of squaters and capitalists, and that those who have land may wish to mortgage it in order to buy more, and that so the demand for money may be increased. The working of the system in Victoria has i stimulated the taking up of land largely by those who as a class, are able to give good security for what they borrow.

If managed with integrity and moderate skill, there would doubtless be profitable occupation for such a company. We have no prejudice against the introduction of English capital in such forms. The common notion that the colony is plundered to the extent to which dividends go out of it, is a vulgar delusion. These dividends represent a profitable use of capital. Tho capital must have previously been imported, or have been created through the agency of imported capital before the dividends could have been realised. There could be no lenders if there were no borrowers. The Englishman could not get ten per cent, for his money in Sydney, Melbourne, or Adelaide, unless colonists were willing to give that rate of interest, and the latter would not be willing to give that rate of interest unless they thought they could make a profit by doing so. Men do not always borrow wisely anymore than they always lend wisely, and some may effect a loan to their ruin ; but, as a general rule, tho rate of interest in Australia, as compared with that in England, is dependent upon the different rate of profit in the two countries. All bona fide commercial transactions arc in theory, though not always in practice, a benefit to both parties concerned. Both the buyer and the selhv make their profit, and mutally accommodato each other. The open market settles tho terms of the purchase, but the act on both sides is voluntary, and is therefore, presumably advantageous. The importation of capital for tho purposes of lending it 'would not be equally agreeable to all parties. It would not be relished by the classes of colonial capitalists who derive their income from mortgagees, in osmuch as it would introduce fresh competition into their field, and tend to chenpen money by making it more plentiful. But then tho much larger class of borrowers would be as greatly pleased, as cheaper money and a little competition amongst the lenders is precisely what they like to see. Tho agency business of tho Company also, supposing it to bo successful, would cut into tho occupation

of private agents. But this is no more than a fair competition and might in many cases prore a very great accommodation. It is characteristic of modern commerce that many occupations are now carried on by joint stock companies which were once private businesses. Notably, this has been the case with banking businesses. In England, many private banks hold their ground under all this competition ; but in Australia there is scarcely a private bank now in existance. Marine assurance companies competo with private underwriters, and agency companies are becoming increasingly popular to transact the business of absentees who, from choice or necessity, leave their property at a distance, but desire punctually to receive its proceeds.