New Zealand Company - Financial Difficulties and Dissolution

Financial Difficulties and Dissolution

The New Zealand Company began falling into financial difficulties from mid-1843 for two reasons. It had planned to buy land cheaply and sell it dearly and anticipated that a colony based on a higher land price would attract affluent colonists. The profits from the sale of land were to be used to pay for free passage of the working-class colonists and for public works, churches and schools for instance. For this scheme to work it was important to get the right proportion of labouring to propertied immigrants. In part the failure of the company's plans were because this proportion was never achieved – there were always more labourers, whose emigration was heavily subsidised by the company, than landed gentry.

The second major flaw arose because a large proportion of the land in the new colony was bought for speculative reasons by people who had no intention of migrating to New Zealand and developing the land they had bought. This meant that the new colonies had a serious shortage of employers and consequently a shortage of work for the labouring classes. From the outset the New Zealand Company was forced to be the major employer in the new colonies and this proved a serious financial drain on the company. Repeated approaches were made to the British government seeking financial assistance and in late 1846 the company accepted an offer for a £236,000 advance with strict conditions on, and oversight of, future company operations.

In June 1850 the company admitted land sales in Wellington, Nelson and New Plymouth had remained poor and its land sales for the year ended April 1849 amounted to only £6,266. With little prospect of trading its way to profitability, the company surrendered its charter. A select committee report concluded the company's losses were "mainly attributable to their own proceedings, characterised as they were in many respects by rashness and maladministration."

Gibbon Wakefield, who had resigned from the company in disgust after its 1846 financial arrangement with the British government, remained defiant to the end, declaring in 1852 that had the company been left alone it would have paid a dividend, recouped its capital "and there would now be 200,000 settlers in New Zealand".

The company, in its final report in May 1858, conceded it had erred, but said the communities they had planted had now assumed "gratifying proportions" and they could look forward to the day when "New Zealand shall take her place as the offspring and counterpart of her Parent-Isle ... the Britain of the Southern Hemisphere."