NEW ZEALAND'S DEPRESSION AND VICTORIA'S PROSPERITY.

Otago Witness, Issue 1894, 9 March 1888, Page 16

NEW ZEALAND'S DEPRESSION AND VICTORIA'S PROSPERITY.

(Melbourne Argus, February 27.)

A New Zealand legislator on his travels here is credited with an intention of inquiring into the causes of the depression in the colony from which he comes, and the prosperity of Victoria, in the hope that the one condition will throw light upon the other. Real property in the one place is a drug in the market, and in the other it has risen and is rising by leaps and bounds. A leading bank has " passed " its dividend in New Zealand, and the banks here pay high dividends and drop in a quiet bonus also. We hear of new applications to the Victorian Government daily for the use of its surplus funds, while the Government in New Zealand is carrying economy so far as to reduce the number of its legislators in order to save salaries. Yet there is nothing on the surface of things to account for so radical a difference. The recent depression in South Australia and in New South Wales presented no such mystery. In these cases lively speculation aud overtrading wero followed by a paralysing drought. The wheat harvest and the wool clip were failures, so that there was a loss of tens of millions ef pounds. The wonder is, not that the depression was great, but that it was not more severe. New Zealand, however, did not pass through such an ordeal. She has had fair seasons, and sheseema to have done what Australia has not— namely, found an outlet in the frozen meat market for her surplus stock.

The popular solution of the situation is found in the debt, and though the cfebt can hardly be the direct cause, it is possible that indirectly it has much to do with the disaster. Altogether New Zealand owes £40,000,000. The interest will be about £2,000,030 per annum, and this ig

a large sum for a community of 600,000 ix* i to be responsible for. Bat the money has b means been altogether wasted. There has h? extravagance, no doubt, and political mismata ment; but for all that the railways and then 2 ! lie works must, as a whole, be beneficial to V Zealand. If they were all swept away toJ*!' row, they would be sorely missed ; and if ' much is admitted, then it follows that thecoi *' has a material set-off for a great part off' 1 indebtedness. Probably not a half, nor anvtv 6 like a half, of the New Zealand debt has W misapplied or unprofitably invested, and the hi' of the burden should not crush an English com munifcyin lands so richly endowed by nature^" these Pacific isles. The German war indemniv which was an absolutely unprofitable drain fi lowing equally serious home disasters, did it crush France. But where the debt has beent' jurious is probably in enabling the finger of !?' proach to be pointed at New Zealand $i effect. As we have said recently, the "wi* 1 ings " of the Standard, of Truth, and of oth? English journals which in their financial coltum! decry or " bear " Australian investments, h^ had no apparent effect. Men with money 1 that the interest we offer is good, and that % security is good also. They are beginning X realise that the tendency of property here a t improve in value, and that therefore their sect rities, far from shrinking, are likely to she* larger and larger margins.

But it is questionable whether New ZeiW has been so succesaful as Victoria has been h repelling attack. The exceptional largeness cl the debt could be taken advantage of by fls critics. It lent point to their onslaughts. Jm Mr Fronde incidentally rendered them effects assistance. Mr Froude never really saw Nfc» Zealand (contenting himself with a dash at tlr hot lakes), but he was indiscreet enough to puk lish the conversations of some erratic inditj, dual— some venomous politician— whom he m e j at a hotel table, and the fixed idea of this being was that the national accounts were systetnal cally falsified and that interest on the debt wy paid out of loans and would 6top when the rais. ing of new loans ceased. Silly talkers of this stamp are always to be met with, but they do not often find an influential and eloquent historian, having the ear of the public, silly enough to provide them with an audience. Eiplanations were promptly offered iv Q^ Britain, but probably it gave financiers tf London a shock to have repudiation as a subject for discussion. They did not sufficiently disca. tangle Mr Froude from his irresponsible mj spiteful hotel chatterer. That idle conversation was pregnant with disaster to the sister State affording another illustration of the connection between great events and trifling causes. So far as a check upon the borrowing by the Go vernment was concerned, no harm has b«n done. But ib is to be feared that, as a comj. quence of the animated and awkward discussion in the English press as to whether New Zealnil ia a provident borrower and a sound and hon&t security, the flow of private funds for iuvestmejt has also been checked, even if a desire to raUse has not set in. This heavy borrowing hu been followed by a sharp restriction, and sharp financial restrictions are always severely felt The more largely the man has been drawing upon his bank, the more he feels the stoppages! his overdraft. On the other hand, the Victoria Government has not borrowed immoderately, We suffer from no public reaction, and it so happens that privately capital has been poured into our coffers. English capital has largely taken up fixed securities here, and has left locjl capital free to seek business and speculative investment. The disfavour of the capitalists hii deepened the reaction in New Zealand, a&i their favour has accentuated our prosperity. But a colony in Australasia has only to wait, and the cloud rolls by. New Zealand is not in the straits which Queensland was in when, 20 years ago, her Government found it difficult to raise money at 10 per cent., and the mortgagees and the owners of property were equally confounded. We may predict with tie utmost confidence that she has only to economise and to tide over present troubles as best she can, and her splendid national resources will soon reassert themselves. In these new conntries we must take gloom and sunshine as they come. The one lesson to be learned from the New Zealand situation is the importance of maintaining the national credit by avoiding atremes in public expenditure and extremes in party strife, inasmuch as it is obvious tnat iv our present stage of development — when we &re largely dependent on foreign capital for the development of our resources — the public credit is the foundation of our progress as a community.