4 JANUARY 1845, Page 38

HOBSON-SHORTLAND FINANCE.

The materials for the history of New Zealand finance, extending from January 1840 to December 1843, are very incomplete. Although it was expressly enjoined, in the instructions forwarded from the Imperial Treasury, that the accounts of the Colonial Treasurer should be remitted quarterly to this country for final audit, Lord Stanley was obliged to remind Governor Hobson, on the 9th July 1842, that no such accounts had yet been received in Downing Street. Governor Hobson, about the time that Lord Stanley was penning thishint, was in the act of transmitting the estimate of "the probable expenses" of his Government for 1842, to which were appended statements (not very intelligible) of the actual income and expenditure of New Zealand for 1840 and 1841. On the 24th May, a Statement a the total Revenues and Expenditure of the Colony for the years 1840, 1841, and 1842, was presented to the House of Commons from the Colonial Office; but when or how it was made up does not appear. The "Correspondence relating to the New Zealand Estimates" bears indications of attempts at concealment, as well as of neglect to transmit information. On the 29th March 1842, Governor Hobson wrote hurriedly to Lord Stanley, that he had 'every reluctantly sanctioned, with advice of his Executive Council, bills to be drawn on her Majesty's Treasury for 5,000/. ;" and that he would probably require another sum of the same amount in the course of a month, to meet the current expenses of his Government. On the 27th June having occasion to draw for other 5,000/., he at last transmitted the minute of Council in which this "advice" is embodied ; and there it is seen for the first time, that the first 5,000/. was only an instalment of 25,0001., which the Council was of opinion would be required to meet the deficiencies of the year.

The money (or money's worth) which actually passed through the hands of the local Government of New Zealand, up to the 31st December 1842, has been derived from three sources,—first, the actual revenue and land-sales of the colony ; second, loans from the Government of New South Wales; and third, money obtained by discounting bills on the British Treasury.

I. The revenue and land-sales are classed together in gross, because, in Governor Hobson's despatch of the 29th March 1842, the frank confession is made—" This excess of expenditure over income, and the • Governor Hobson's letter to Colonel Waketleld, ilth Sept. MC House of Commons Paper, 1842; No. 669, p. 168. Home of 0011111101111 Papers, ism; No..569, pp. 26 mid 1112.

consequent payment of salaries and wages accumulated during the last quarter of 1841, obliged me to apply the only available funds within my reach, the land-fund to meet the expenses of the colonies." A revenue was collected from the Post-office, an auction-duty, licences to auctioneers, &c., and fines and fees of court, from the very foundation of the colony. The first sale of Crown-lands took place on the 19th April 1841; and the customs-duties began to be collected at Auckland on the 1st July and at Wellington on the 25th August 1841. The total ordinary revenue of the colony for the three years 1840-41-42, amounted to 26,1091.; to which must be added 5,5141. for "incidental receipts." The proceeds of the land-sales in the colony for 1841-42 amounted to 39,3631. During these three years, therefore, a sum of 70,9861., drawn from the British settlers in the shape of taxes and the price of Crownlands, passed through the hands of the Hobson-Shortland Administration. II. The advances made by the Treasury of New South Wales, to defray the expenses of the Colonial Establishment in New Zealand, amount in all to 44,7041.: of this sum, 36,3511. was advanced in money, and 8,452/. in goods.* III. The bills drawn at various times on the Home Treasury by the local Government of New Zealand are as follows-1. On the 23rd March 1842, Governor Hobson drew and discounted bills to the amount of 5,0001. 2. On the 18th June, he drew and discounted bills to the amount of 5,000/4 3. On the 24th August, he again drew and negotiated three bills to the amount of 5,0001. each. The Treasury appears to have accepted the bills of the 23rd March and 18th June ; but it refused to accept the three bills of the 24th August.: From Lord Stanley's intimation, however, that "Her Majesty's Government are prepared to authorize the issue of debentures for the amount of the bills which have been so drawn, payable from the revenues of New Zealand," there is reason to believe that Governor Hobson had raised some money upon those bills.

IV. In October 1842, ;Mr. Cooper negotiated at Sydney three bills of 5,0001. each, drawn by Mr. Shortland on the British Treasury. These were not accepted; but it has been stated in the Southern Cross, (Auckland newspaper,) and without contradiction, that 6,8001. was received upon these bills. The "State of Revenue and Expenditure" admits the receipt by the local Government of New Zealand of 13,4941. to account of bills drawn on the Imperial Treasury: but this is obviously an under-statement. Governor Hobson received 5,0001. (deducting discount on the bills drawn in March and June 1842); and Mr. Shortland received 6,8001. on the bills negotiated at Sydney by Mr. Cooper. Something also appears to have been raised on the bills for 15,0001. drawn by Governor Hobson on the 24th August 1842. The money raised in this manner during the course of 1842 can scarcely have been less than 20,0001. The whole of this sum was spent within the three years : for although the official" Statement" shows a favourable balance, the Auditors admit that it is only apparent—owing to the peculiar manner in which the accounts are made up. Altogether, then, there was raised by the local Government of New Zealand, in the course of three years, by loans, bills, taxes, and landsales, no less a sum than 135,6901.§ A Parliamentary grant has been obtained to cover the debt due to the Treasury of New South Wales, and the first two bills for 50001. each drawn on the British Treasury by Governor Hobson ; so the colony is released from a debt of some 65,0001. with which the financiers of the Shortland-Hobson Administration had burdened it. But, although no accounts of the financial operations of 1843 have yet been published, there is too much reason to believe that they were neither more economical nor more judicious than those of the years that preceded them ; and that the late Government has left the colony in debt. On the 19th April 1843, Mr. Shortland reported, that he had drawn on the British Treasury for 1,559/. This sum, appearing to have been expended on the Parkhurst boys sent to Auckland, and the emigrants in the ship Westminster, was accepted. A draft of 3,0001. on the British Treasury, intimated in Mr. Shortland's despatches of 13th June 1843, was not accepted ; and the same fate befell bills drawn by him for 5501. on the 25th September, in favour of the New Zealand Banking Company, for sums advanced to the local Government!! These are indications that the "raising-the-wind" system still continued to be practised. The terms on which the bills for 15,0001. were negotiated at Sydney by Mr. Cooper in October 1842, show the miserably low ebb to which the credit of the local Government of New Zealand had sunk, and the shifts to which it was reduced. The Bank of Australasia consented to accept bills to the above amount on the British Treasury, at intervals as the necessities of the Auckland Government required, on receiving 15 per cent, discount, and debentures payable on the revenue of New Zealand (as security in the event of the bills being dishonoured) to the full amount of the sum drawn for. The promised debentures were not forwarded to Sydney along with the first bills drawn for 5,0001.; but these bills were discounted, to save the credit of the Auckland officials. Bills for 3,000/. were subsequently discounted by the branch of the Bank at Auckland, on a promise being received that the debentures should be forwarded to Sydney ; but the debentures not being forthcoming, these bills were dishonoured by the managers there. The most prominent feature of these financial operations is their rashness. From the very beginning the local Government of New Zealand traded on borrowed money. The revenue raised within New Zealand in 1840 was only 9261.: the expenses of that year were defrayed mainly from a loan in money and goods to the amount of 33,0641. advanced from the Treasury of New South Wales. People who easily obtain large credit on first setting up in business are seldom remarkable for judicious economy. The Hobson-Shortland Administration appear to have calculated on always getting at money as

* House of Commons Papers, 1844, Nc. 329; and 1842, No. 408. t Governor Robison's Despatch to Lord Stanley, 27th June 1842. House of Commons Paper, 1843, No. 134. 3 Appendix to Report of House of Commons Committee for 1844. Lord Stanley's Despatch to the Officer Administering the Government of New Zealand, 9th April 1843 p.251. 5 This necessarily differs from the total in the "Statement," because on the one hand we correct the under-estimates of money raised by bills ; on the other, omit the money paid in this country for emigration. Appendix to Committee's Report, p.253.

easily as they did by borrowing from the New South Wales Treasury Governor Hobson's first estimate is a proof of this. Ignorant of the value of money, because he had hitherto come so easily by it, he in the beginning of August made a random calculation that the " probable " amount of the ordinary revenue of the colony for the year was 19,4001.5 On the 15th January 1842, he wrote in astonishment and consternation to Lord Stanley, that it could not possibly produce more than 13,0001. The real amount was less than 6,5001.* His expected returns from land-sales were equally exaggerated; and in neither case does he appear to have had any probable data to frame his estimate on : he wrote down the sum he wished to have. No way of getting out of the scrape appears to have suggested itself except by staving off payments, laying hold of the land-fund, and borrowing more money. At the close of the year 1841, he had contracted an additional debt of 13,3201. to the Government of New South Wales ;.1and almost all the officials were in arrears,: and the immigration-fund had been expended for other purposes.l In 1842, a feverish consciousness of his embarrassed circumstances can be traced, in the concealment from Lord Stanley of his intention to draw on the British Treasury for 25,000/., when he announces that he has drawn for a first instalment of 5,000/. It is confessed that nearly 13,500/. WM raised for bills on the Imperial Treasury in 1842, though the local revenue had risen to about 19,0001. The growing effrontery of men in embarrassed circumstances may be discerned in the unblushing perseverance of the Hobson-Shortland Administration in raising money by discounting bills on the British Treasury after they had been warned that all such bills would be dishonoured. The usurious transaction of Mr. "Acting Officer" Shortland with the Bank of Australasia was the climax of financial disgrace. It ought also to be observed, that much of this heavy taxation was extorted from the British settlers; and much of the debt which but for the interference of the Imperial Goya-thetnt they would have had to pay, contracted in their name, wk4n, jr deriving any benefit from it. It appears from a statement mathce, Mr. Shortland himself, 11 that in 1842, the revenue of the Cook's Straits settlements exceeded their expenditure : the revenue was 12,4141., and the expenditure 7,9211. We have not so precise an estimate of the income and expenditure of the Bay of Islands ; but there also the income appears from the "Statement" to have been in excess. Yet, in the same year, a debt of 13,491/. was contracted to New South Wales, and the sum of 13,4941. raised on bills drawn on the British Treasury. The British settlements which Governor Hobson found in existence when he lauded in New Zealand paid all their expenses and left a surplus : this surplus was spent, and a debt of 26,9851. contracted, to pay the expenses incurred by forming two new settlements—Russell and Auckland.

For the large outlay of the New Zealand Government there is no visible permanent return. By far the greater part of the expenditure has been incurred for salaries. Out of the 135,6901. spent in the course of three years, 12,028/. has been expended in the survey department ; 6061. on roads and bridges ; 4,0451. in the purchase of lands for the Crown ; 24,6001. on public works and buildings, (of which the Governor's houses, and his garden, called "the Government domains," have swallowed up a most disproportionate share) ; only 3881. for ecclesiastical purposes, and 91/. 8s. 6d. for schools. About 40,000/. has been spent in a way to leave some trace behind it ; but the rest has been consumed by employes, who, it has been shown elsewhere, did nothing useful.