SATURDAY, SEPTEMBER 12, 1855.

Otago Witness, Issue 1764, 12 September 1885, Page 17

SATURDAY, SEPTEMBER 12, 1855.

The report of the committee on the subject of State advances on land which we publish elsewhere will be read with much interest. We presume that this is the first step towards carrying out Sir Julius Vogel's proposals as stated in" his Dunedin speech. We had thought, and we had hoped, that the proposals had been abandoned, but it seems that this is not the case, and that Mr Macandrew is chosen as their guide, philosopher, and friend. The preface of the report shows a certain carelessness in its compilation which is hardly creditable in dealing with a subject which, above all others, demands accuracy and precision. We are told " one of the chief drawbacks to the full and successful development of the agricultural and pastoral resources of New Zealand by men of limited means is the high rate of intei-est on mortgage, and the extent

to which such interest is withdrawn from the Colony by absentee mortgagees." Are we to understand that the absenteeism of mortgagees is one of the drawbacks to the development, &c, &c. If this is really intended to be meant, we certainly differ from the conclusion, and should much like to know the grounds on which such a conclusion is arrived at. Nor do we agree, as a practical matter of fact, that the high ratp of eight per cent., if that is the ascertained average interest chargeable on mortgages, can be called a chief drawback to agricultural development. Contemplating the position of a settler who buys 300 acres of land at L 3 per acre, the value fixed under the Property Assessment Act may be reckoned at LBOO, and Government under these proposals for lending may advance at the most L4OO. The charge on this will be at 4£ per cent., LI B per annum. Under the existing methods the settler would probably borrow L6OO, and have to pay L4B per annum; but if he contented himself with the same amount that he could get from Government he would have to pay L 32 per annum. That is, under Mr Macandrew's proposals he would fird himself much cramped for capital, and would save LI 4, or the difference between LI B and L 32 per annum. We have taken the figures as given by Government. Does it not require a stretch of imagination to say that a narrow margin of this kind, though' often repeated, makes the difference between the development of our resources agricultural and pastoral, and the reverse ? It must be ■ remembered, in determining as to the advisability or

otherwise of the proposals, that the settler who avails himself of the Government proffers limits to a great extent the sum that he will be able to expend on his property. A little less than half the capital value of a farm is a comparatively small sum to borrow and expend on it. This may be well as a matter of moral discipline exercised by a paternal Government over its too extravagant go-ahead children. Regarded from the standpoint of development, the restriction means a very distinct curtailment. Moreover, we have great doubts whether any considerable class will avail themselves of the opportunity Government proposes to give them. It is not usually considered wise finance in a settler to pledge his place for a small sum, although no doubt the ease with which the first mortgage to the Government can be paid off at any time renders the customary arguments against the borrowing an insufficient sum less forcible. We should like to think Vhat the average settler in this part of the Colony is in a position to borrow something less than half the capital value of his freehold.

Turning now from the gain to the settler, and the probability of his being able to avail himself of the proposal, let us look at the matter from the Government standpoint. The mortgage money is to be advanc«d in the shape of debentures of not less value than LI OO each, with a currency of 15 years, principal and interest payable either at the Colonial Treasury or Bank of England. The settler then above referred to will find himself in possession of four one hundred pound debentures. What, as a matter of fact, will he do with them ? Take them to his banker and draw against them 1 Will the bank take them at par, and give him 400 sovereigns or their notes to that amount? Certainly not, we should say, unless by some special arrangement. It is by no means impossible to make such an arrangement; we only insist on the fact that it will have to be made. A promise to pay 15 years hence, and pay interest in the meantime at 4£ per cent., is not the same as a promise to pay on demand and give no interest. The difference will have to be adjusted by arrangement. Now it seems to us that if the banks take these Government debentures or notes, they will almost certainly send them Home, and the interest will then be paid at the Bank of England. Very few Colonial banks indeed will care to hold them ; they can do better with their money. There is a great tendency in securities of this particular kind to gravitate towards England. If this is so, what becomes of the argument that " the extent to which such interest is withdrawn from the Colony by absentee mortgagees " being " one of the chief drawbacks to the full and successful development, &c, &c." ? Whether the interest is paid to individual mortgagees living in London, or whether it be paid to persons holding these mortgage debentures, does not make much difference to the development of the Colony.

The above are some few of the main questions raised by Mr Macandrew's proposals. There are many other larger questions raised by what in these Colonies, at any rate, y is an entirely new departure. We have very little confidence for instance in the integrity of successive Governments who, limited as their power may be in many ways, will have the opportunity of advancing L2OOO to an individual during a period of political pressure, Nor oan we suppose, judging by any past experience, that the machinery of this new department will be worked with that precise individual care and attention which money - lending in any form requires. More than this, commerce of all kinds, as we well know, never thrives when Governments interfere with it, and we have yet to learn that agriculture stands i« any different position. Under Drainage Acts in Great Britain sums are advanced to landowners for the express purpose of improving their land by drainage, and under the strictest regulations as to repayment.' We are not aware what the regulations are in Prussia, and in certain American States cited in the resolutions before us, and we should much like to learn how the results accomplished in these countries appear in the eyes of those qualified to judge. Mr Macandrew is always patriotic, often enterprising, but often merely visionary ; we will not say in this instance under whioh heading his present proposals ought to be placed,