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Last Updated: 7 December 2024
Capitalism and Commercial Law in Colonial New Zealand
Capitalism and Commercial Law in Colonial New Zealand
R P Boast*
Colonial settlement in New Zealand was seldom a matter of solitary pioneers hacking farms out of the forest as if it were Kentucky at the time of The Last of the Mohicans. Right from the start of the colonial era New Zealand was largely “settled” not by Pakeha individuals launching out on their own into the unsurveyed forest, axe and shovel in hand, but rather by companies, beginning with the New Zealand Company and its offshoots, followed in turn by the Manchester Company in the Manawatu and then by various land settlement companies in the Waikato. Those who did hack farms out of the forests were typically working plots bought from land companies. These companies were run by businessmen and financed from London. In few other British colonies was corporate settlement colonialism so significant. The New Zealand North Island frontier was, above all, a frontier of capitalist expansion managed by powerful land companies. By around 1870, New Zealand was capitalist through and through, its capitalism underpinned by the well-developed edifice of English commercial and company law, which was of course the very same edifice which structured capitalism in Britain and the Australian colonies and which was also the parent of commercial and corporate law in the United States. New Zealand belonged to the Anglo-capitalist global world.In the decades after the close of the New Zealand wars around 1873, parliamentary politics (and hence government) and the commercial sector were unusually intertwined. These close interconnections appear to have lessened during the Liberal era after 1891, the Liberals setting their faces against what they liked to call the “money power”. Following the Liberal collapse, the intertwining began anew. After 1910 a new conservative political constituency arose, the export dairy industry, which provided, and continues to provide, a rock-solid support base for the political right in New Zealand; in return for this support, conservative governments, first affiliating to the Reform and then to the National party, have protected the dairy industry at every turn. Far from being a creation of sturdy individualists, the dairy industry has been a ward of the state from the beginning. It took some time, however, for dairying to become a dominating sector of the New Zealand economy, and after 1870 it was merchants, bankers and land speculators who provided the support base for the more conservative regimes.
* KC, OMNZ, Professor, Faculty of Law, Victoria University of Wellington.
New Zealand was not, and never has been, a country where capitalism ran simply unchecked, any more than was the case in England or the United States. It operated within a framework of law, a mix of statute law and English common law based on a doctrine of precedent, stare decisis. In New Zealand, unlike in the Australian colonies, Māori people, as Christians, were freely able to give testimony on oath and bring proceedings in the courts. Māori adapted very rapidly to this legalistic world, obtaining legal advice and bringing proceedings in the courts against both Pakeha and one another. The Native Land Court system, for all its shortcomings, was rule-bound and provided for rights of appeal and review. Sometimes portrayed as a brusque and simplistic system it was more the opposite, characterised by endless reviews, appeals, rehearings, and legislative tinkering.
The dominant tendencies of later 19th-century New Zealand, which might be identified as forest clearance, bush settlement, capitalist investment, railways, immigration, and the increasing economic weight of the North Island, take their origin from one of New Zealand’s most talented ministries in its entire political history, the Fox-Vogel-McLean government that took office in 1869. As Rollo Arnold has put it, “the Fox cabinet was in itself something of a political miracle in the striking adequacy of its experience and talents”.1 This government dealt with the military threat posed on the North Island frontiers by the Māori military leaders Titokowaru and Te Kooti, sponsored large-scale immigration from the British Isles and Scandinavia, and directed rapid economic growth and an accelerated programme of road and railway construction, financed by borrowed money. Fox, Vogel, McLean, Featherston and their colleagues succeeded in “the demilitarising of the frontier; the coaxing of a strong flow of money from the London money market, primed by an initial one million pound loan guaranteed by a reluctant Imperial government; the recruiting of the colony’s largest inflow of British and European immigration; and the carrying through of the extensive forest clearance, land settlement, and public works construction that the North Island strategy envisaged”.2
The New Zealand economy was growing fast and was in a state of transformation. By the early 1880s New Zealand’s principal export was still wool, produced mainly in the South Island but also to a significant extent in Hawke’s Bay. The scale of the Hawke’s Bay export wool industry can be seen today by the converted warehouse buildings that adjoin the port of Napier. Wool was moved around the country by the fragmented rail system and by a substantial coastal shipping network which brought it from smaller coastal ports around the country to the wool export ports that connected with the British Isles. The main wool ports were Lyttelton, Wellington, and Napier.3 By 1885 the frozen meat export trade was
(Victoria University Press, Wellington, 1994) at 25.
starting to become noticeable. In that year 3,628 tons of frozen meat left the port of Wellington for Britain; livestock was brought to Wellington -which by then had its own freezing works - by sea from Wanganui and the Taranaki port of Patea.4 With the railway system still so disconnected, the New Zealand economy was held together mostly by coastal shipping; the principal reason for Wellington’s rapid growth from around 1870-1890 was not so much because it was the capital but because Wellington was the central node of New Zealand’s coastal shipping network.5 The global reach of Britain’s merchant fleet brought modern commodities to New Zealand’s ports, “cargoes of imports brought by the big ships: wire, and watches, sugar and sewing machines, glass and ginger, pianos and ploughs.”6 The material civilization of Victorian Britain then moved in turn from the major ports of Wellington, Auckland and Lyttelton to smaller coastal ports around the country and which from there spread to such Māori villages as Te Wairoa and Ohinemutu in the Rotorua region, Otaki in the Kapiti region, and Waotu in the Waikato.
Corporate and individual speculations in Māori land occurred within a developed framework of capitalist commercial law. Britain possessed, of course, a very sophisticated and very large capitalist economy, an economy which rapidly took root in the Australasian colonies. As is well-known, corporate financial markets developed rapidly in late nineteenth-century Britain and the United States.7 New Zealand, while de facto politically independent of Britain by the 1880s, was certainly a British economic colony, where highly leveraged land settlement companies financed by imported British capital proliferated amazingly. So did banks. By the 1880s imposing bank buildings were visible everywhere in New Zealand’s, as in Australia’s, cities and towns. They were just as visible in the American West and in the coffee zones of Central America. A bank building was designed to project an image of solidity and reliability, albeit an image that was hardly justified by the realities of New Zealand’s banking system. No less important than the physical infrastructure of bank and office buildings was the legal infrastructure necessary for frontier capitalism. The latter developed rapidly. There was, similarly, a merchant and commercial class. “The colony’s heavy dependence on overseas trade gave the merchant a dominant place in urban New Zealand”.8
II The Emergence of Commercial Law in New Zealand
Building on English lines, the colony rapidly put together a comprehensive commercial law system. At the heart of English commercial law lay the
4 At 204.
5 At 201.
6 At 204.
vast structure of the English law of contract, which reached its “mature form” by 18709 but which by the later 19th century was being substantially added to by legislation relating to certain special types of contracts, notably sales, insurance, bills of exchange, and chattels securities. Like Roman law, the English law of contracts is a mix of general rules that apply to all contracts and particular rules governing certain specialised contracts such as sales and securities. New Zealand commercial law was basically English law. Some New Zealand commercial law statutes were just complete copies of their English equivalents which had already been thoroughly tested in the courts in Britain and with which businessmen and solicitors in New Zealand were already familiar. Various local ordinances and statutes relating to commerce and banking were rapidly put in place, including the Copyright Ordinance 1842 5 Vict 18, the Bills of Sale Act 1867, the Debtors and Creditors Act 1876 and the Sale of Goods Act 1895, but these were essentially replicas of the equivalent English statutes. A governmental apparatus to devise specialised commercial statutes did not exist, and it made sense to simply copy English enactments. The Australian colonies, Canada and the Cape Colony did the same. As professor Goode has put it, the English Bills of Exchange Act 1882 (UK) 45 & 46 Vict c 61 and the Sale of Goods Act 1893 (UK) 56 & 57 Vict c 71, finely drafted by Sir Mackenzie Chalmers, were adopted “almost verbatim” throughout the British colonies.10 This gave the Australian colonies, Canada, New Zealand, and Britain a more or less uniform system of commercial law. There was no reason for the colonies to launch out on their own at that time with innovative law making.
The core statutes were the same, and the colonial courts shared one another’s precedents amongst themselves. British insolvency legislation was also the model for legislation in the colonies.11 The Sale of Goods Act applied to sales of stock, and cases relating to the sale and purchase of sheep were soon before New Zealand’s Supreme Court and the Court of Appeal.12 A typical Sale of Goods Act case related to the sale of 3,000 sacks of oats in Otago in 1903.13
Credit was pivotal to economic growth and the expansion of settlement. Few settlers arrived in New Zealand with large supplies of pound notes and gold sovereigns. To buy and develop land and acquire livestock money had to be borrowed from banks and other lending institutions. Historians of the American colonies are very aware of the importance of credit in colonies of settlement. Writing of the American colonies in the eighteenth century, Bruce H. Mann has drawn attention to the centrality
1979) at 681.
of credit in colonial life. In early America, “credit was the wheel of commerce, both foreign and domestic” and was the “engine of internal development.”14 This is no less true of colonial New Zealand. No less important was debt, credit’s evil twin. Debt and legal actions relating to debt and bankruptcy were everywhere to be seen in the American colonies, where “debt cut across regional, class, and occupational lines so completely that everyone stood somewhere on the continuum of indebtedness that ran from prosperity to insolvency.”15
The reported decisions of the New Zealand Courts reveal a similar picture. By the early 1880s, if not before, numerous commercial cases were being regularly fought out in the New Zealand courts, building up a system of reported precedents and a reservoir of commentary on the new colonial ordinances and enactments. With the expansion of the colony’s banking system the courts quickly began to build up a body of caselaw on the duties and liabilities of banks, carefully following English and Scottish decisions as they did so. There were cases on such points as to whether a bank could have a right of set-off at an account at a different branch from that against which a cheque had been dishonoured (it did).16 Other cases involving banks in the 1880s related to rights of surety17 and chattels mortgages (bills of sale),18 guarantees, and many related matters, showing the growing visibility and sophistication of the banking system. Yet other cases related to real property law issues such as the enforcement of covenants in leases and the sale and purchase of sheep and cattle.19
The Bank of New Zealand, the Bank of Australasia, the National Bank of New Zealand, and the Bank of New South Wales were all actively trading, obtaining legal advice and representation, suing and being sued in the colonial courts and at times taking appeals to the Court of Appeal and the Privy Council. A financial industry transplanted itself to New Zealand with amazing rapidity. Where there is a need for capital, banks and other lending institutions soon make their appearance. Other sophisticated financial entities such as the New Zealand Loan and Mercantile Company supplemented the private banks and were involved in commercial cases in the courts up to the level of the Court of Appeal.20 London financial houses such as Sclanders and Co made arrangements with partners in New Zealand to channel funds to mortgagors in rural
(1883) 1 NZLR CA 325 (enforcement of guarantee).
New Zealand.21 Promissory notes, mentioned by Professor Mann, were also widely used in New Zealand.
The English law of partnership was soon fully operative. As Patrick Atiyah has noted, “partnerships or unlimited liability companies, were still the normal form of commercial enterprise until the middle of the nineteenth century”.22 Partnership law was also important because many solicitors loaned money for investment on behalf of their clients, making law firms important financial institutions.23 New Zealand’s Partnership Act 1891 was also derived from English statute law. Cases went to the Court of Appeal on the rights of purchasers or mortgagees of partnership property.24 Some solicitors, such as J.H. Hankins in Palmerston North, built up contacts with financial institutions in London and channelled British capital towards mortgagors in the provinces.25 Hankins spent most of his working life as a solicitor in Palmerston North. His first office was originally a small wooden structure when Palmerston North was still being hacked out of the surrounding forests. Mr Hankins became something of a local identity and died in 1928, by which time Palmerston North was one of the North Island’s most substantial towns.26
Chattels mortgages were especially important in the colonial economy, the bills of sale often secured on livestock. Reported commercial cases often related to the enforcement of bills of sale and to the interpretation of the Bills of Sale Act 1867.27 While it may seem that chattels mortgages are the most wretchedly boring subject imaginable, chattels mortgages were in fact pivotal in rural New Zealand. They were not boring to sheep farmers and investors. Without such financial instruments, New Zealand’s agricultural expansion would have been halted in its tracks. Stock, sheep especially, were often mortgaged under bills of sale (chattels mortgages) under the Act of 1867. A new statute, the Chattels Transfer Act, was enacted in 1889, based to some extent on the English Bills of Sale Act 1878 (UK) 41 & 42 Vict c 31. The new legislation was designed to make the system of registration of chattels mortgages more like the registration of real property mortgages under the Land Transfer Act. Rural newspapers thought the new legislation important enough to be explained to their readers.28
(Manawatu, 4 July 1928) at 9.
One New Zealand historian who has seen the significance of chattels mortgages and stock in trade financing is RCJ Stone: “the legal instrument of the bill of sale over stock,” he writes, and over “tools of trade, and personal chattels to provide collateral security, helped to advance, for example, hotelkeepers and bush contractors”.29 All these areas of law could end up in the courts and generate lengthy written precedents. The judgments of the Courts were entirely English in form, some of them quite lengthy and fully reasoned and citing an array of textbooks, statutes and reported cases. My own subjective opinion, after wading through many early volumes of the New Zealand Law Reports and Gazette Law Reports, is that in terms of legal analysis the quality of the judgments was on the whole quite high. New Zealand’s judges methodically reasoned their way through complex points of contract, commercial, and company law and documented authorities in the true meticulous style of English Common Law.
Hoary Common Law issues such as the Statute of Frauds 1677 (Eng) 29 Cha II c 3 were learnedly pondered in the New Zealand Courts, the barristers and the judges citing English precedents of great antiquity, in, for example, cases arising in such busy colonial contexts as the sale of 100 bullocks and 100 cows by a cattle-broker in Dunedin30 and the purchase of the Royal Hotel in Palmerston North.31 English legal textbooks, such as Addison on Contracts, Copinger’s Law of Copyright, Dart on Vendors, Dicey on Conflict of Laws, Fisher on Mortgages, Fry on Specific Performance, Gale on Easements, Goddard on Easements, Lindley on Companies, Parsons on Partnership, Smith on Mercantile Law, Story on Agency, Scrutton on Copyright, Palmer’s Company Law, Tristram and Coote’s Probate Practice, and the English Encyclopaedia of Forms and Precedents were regularly cited by New Zealand’s barristers and judges.32 (Some of these textbooks, much reworded and updated, still exist.)33 These textbooks were used by lawyers throughout the English-speaking world. None of these books would probably be anything that historians of books and literature would ever want to read, but law books are still books, and a great many of them crossed the beaches of New Zealand to be pondered and cited in the colony’s courts. Histories of “the book” are now rather popular, faddish even, but it is unlikely that legal textbooks are particularly what historians of “the book” have in mind.
There were also insurance companies operating in New Zealand, such as the New Zealand Insurance Company (NZI), the South British Insurance Company, and the Commercial Union Assurance Company. Cases relating to insurance matters, in which insurers participated as either plaintiffs or defendants, proliferated in the New Zealand courts. Insurance was an important matter in the colony, especially given the widespread practice of felling native forest in summer, letting it dry out and then burning it. These “bush burns” all too readily got out of control, especially in times of drought, and created terrifying infernos that could destroy whole towns.34 Few bush towns had anything like adequate fire brigades. At times insurers understandably refused to insure against fire.35 Nor did insurers show much interest in helping to pay for fire brigades. The bush settlers had not invented New Zealand’s reckless policies of land clearance and destruction by fire, but they often paid the price of this folly. Rural settlers in the bush zones in Hawke’s Bay and Taranaki, even when they were able to save their homes during bushfires, could lose stock, cowsheds, pasture, gardens, pigsties, and seed.36 For many New Zealand rural people, being “burnt out” was much more than a metaphor. Life for the settlers in the bush zones could be brutal. New Zealand under Pakeha settlement “was a world of wooden walls and shingled roofs, unkempt gardens, streets, hedges and farms, of hay lofts and thatched wheat stacks”.37 It burned down easily. Cases relating to insurance figure prominently in the early volumes of the New Zealand Law Reports.38
III Bankruptcy and Insolvency
In a commercialised, capitalist credit-and-debt society like colonial New Zealand there was always the risk of failure. Professor Mann, one of the few legal historians who has developed an interest in credit, debt, and insolvency, has noted that “whether a society forgives its debtors and how it bestows or withholds forgiveness are more than matters of
economic or legal consequence”.39 These issues “go to the heart of what a society values”.40 One gets the impression, at least, that insolvency was not seen as especially morally culpable in colonial New Zealand, given the pervasiveness of the land speculation industry. At least, issues relating to bankruptcy and insolvency were often before the New Zealand courts. There are, for example, numerous reported cases, and doubtless many more unreported ones, relating to bankruptcy proceedings under the Debtors and Creditors Act 1876.41 The 1876 Act was replaced by the Bankruptcy Act 1892, and this statute needed to be analysed by the Courts in numerous complicated cases dealing with assignment of mortgages and other complexities.42 New Zealand’s company law, exemplified by the Joint Stock Companies Act 1860 and the Companies Act 1903, was also entirely based on English legislation.43 The New Zealand courts dealt with issues such as whether a dairy company’s attempt to sell off its assets was beyond the powers (ultra vires) as set out in the memorandum of association entirely on the basis of English reported decisions and company law textbooks published in Britain.44 There were many cases on directors’ fees and on company debentures.45 Corporate insolvency (liquidation or winding up) generated its share of caselaw as well, typically applying English precedent.46
To say that New Zealand company law was based on English legislation does not mean that it was well designed or adequate to protect unwary investors: quite the reverse. It meant only that New Zealand’s company law was as lax as that in Britain itself. As Professor Stone puts it, “information that would be considered essential today to provide a clear picture of the condition of a company was undisclosed in British, Australian, or New Zealand Companies at that time because there was no statutory obligation to reveal it”.47 The situation in the United States was no better.48 Company prospectuses would say practically anything to attract investors, routinely suggesting “that provisional directors were somewhat uncomplicated men characterized by probity, acumen, and a
19 & 20 Vict c 47 and the Companies Act 1862 (UK) 25 & 26 Vict c 89. The
latter essentially removed all obstacles to incorporation.
readiness to share investment opportunities with others”.49 A prospectus could typically suggest that the promoters were driven by nothing more than a generous and public-spirited motivation to establish a necessary and useful enterprise for the good of the nation and the region, which many investors seem to have been unwise enough to believe. The law is much stricter now,50 but the problem of unreliable statements in company prospectuses has far from gone away. In the freewheeling New Zealand of the 1880s there were essentially no controls and practically anything might be said. An example is the prospectus of the New Zealand Iron and Steel Company, set up to mine and process the vast iron sands of the Auckland western coast. The prospectus made all kind of wild claims about the technical feasibility of the project, but “the expectant shareholders lost every penny of their investment within three years.”51
IV Title to Land
But there were new fields of law too. One of these was the new-fangled Torrens system of title registration, first devised in South Australia, given effect to in New Zealand by the Land Transfer Act 1870.52 Land Transfer Acts abolished older forms of action long used in the common law courts to try title to land and attempted to give absolute protection to landowners who held titles or mortgages registered under the new statutory system. Usually seen as a mechanism to protect the interests of purchasers, the protections afforded by the Land Transfer Acts in Australia and New Zealand were no less important for the protection of investors and mortgagors. “Colonial legislatures established land registries to demarcate rights more clearly to land than the existing system in England”, Professor Mann has noted, for the reason that “land was the principal form in which wealth could be held, and mortgage markets were central to colonial liquidity.”53 The Courts had to puzzle out new questions such as what kinds of rights existed between a landlord and tenant with respect to an unregistered lease, an issue which could not arise in England (but of course could in Australia). In one such case Williams J. held, quite in accord with modern indefeasibility of title law, that an unregistered lease could not pass a legal title, as that would be contrary to the legislation, but an equitable interest could indeed still
pass and give sufficient grounds for an injunction.54 A recondite issue for historians, no doubt, but of burning interest to the parties and with some significance for many of the people of the colony, Māori as well as Pakeha.
Other Land Transfer Act cases made an early start on grappling with the meaning of the “fraud” exception to indefeasibility of title under the Land Transfer Acts,55 an issue that remains troublesome even today. There were cases relating to the powers of a District Land Registrar to refuse to deposit survey plans.56 Chattels mortgages were also registrable, under the Chattels Transfer Act 1889, resulting in cases about, for example, whether chattels mortgages of sheep had been properly registered.57 Registration of chattels mortgages was important, as registered mortgages had priority in bankruptcy over unregistered bills of sale, no minor point, whether for Māori or Pakeha farmers, given the universal practice of mortgaging flocks of sheep and herds of cattle.
V Māori Land and the Ordinary Courts
Even more fertile in terms of generating caselaw was the state-imposed system of statutory Māori land tenure. Unlike the Torrens system, the statutory Māori land system was unique to New Zealand and had no counterpart in Australia – or anywhere else. The Māori land titles system derived originally from the Native Lands Acts of 1862 and 1865, which privatised the Māori land market and created a new judicial body, the Native Land Court, set up to investigate land blocks held in Māori customary title as part of a two-step process of converting Māori land titles to freehold grants.58 The new system caused chaos and intersected with the Torrens system because Torrens titles took the place of old-style Crown grants as the end point of the title investigation system centred on the Native Land Court. The Native Land Court is a well-studied institution, generating its own caselaw, but what is far less appreciated is that the uncertainties of Māori land titles deriving from the Native Land Court’s investigations caused endless litigation in the ordinary Courts, many cases reaching the New Zealand Court of Appeal, and
some even the Privy Council,59 forcing the Law Lords to grapple with the intricacies of Māori tenures.
This Māori land caselaw was seldom concerned with questions which are now regarded as important, the status of the Treaty of Waitangi or the consequences of the Common Law of native title, both subjects being the focus of many a learned treatise at the present day. Rather, the Courts struggled with cases relating to legal problems generated by the statutory Māori land system. The statutory system did not create a coherent system of “Māori land” as that term is understood now, but rather a confusion of different, but overlapping, categories each of which had its own complexities. There was Māori customary, or papatipu land,
i.e. land in Māori ownership which had never been investigated by the Land Court; land which had been Crown-granted to Māori; and land held under memorial of title under the Native Lands Act 1873. There was also “section 17” land, governed by s. 17 of the Native Lands Amendment Act 1867. “Memorial” land under the 1873 Act was especially baffling. What kind of interest was it? “Memorial” land was not the same as Crown-granted land, nor was it “customary” land in the sense of papatipu, or uninvestigated land. There were particular problems, for example, about legal issues relating to bankruptcy and memorial land.60 Cases on the relationship between the Māori land system and registered titles under the Land Transfer Act also surfaced in the ordinary courts.61
Such issues are wearisome to describe and analyse now, and may seem arcane, but Māori were caught within the statutory system and its legal complexities. Whether the assets of a bankrupt Māori chief included his interests in memorial land was in no way arcane but was a very immediate and practical problem. Not only that, but it was also a practical problem that required expensive legal proceedings to resolve. Māori had no choice but to come to terms with the system: they were trapped in its toils. Law is technical, and Māori land law is especially technical, but it is also important. The discipline of law is not supposed to be fun or light entertainment, and, indeed, is not.
The government tried to cut through technicalities by promoting special legislation to remedy tenurial problems in the localities, but these special regimes only generated their own legal complexities and generated yet other strands of litigation. Examples are the Poverty Bay Grants Act 1869, the Native Equitable Owners Act 1886, the Thermal Springs Acts (these
related to Māori land blocks in the “thermal springs” Rotorua-Taupo region), the West Coast Settlement Reserves Acts (particularly fertile in generating litigation), and the Orakei Māori Reserve Act of 1882. The Native Land (Validation of Titles) Act 1893 produced a stream of legal decisions, including at least five reported decisions of the Court of Appeal and one of the Privy Council.62
Sometimes one party to a Māori land case would be Pakeha, and the other Māori. Or both plaintiff and defendant might be Māori. Māori were not at all averse to suing one another over land matters in the ordinary courts of the colony. But it goes without saying that once Māori litigants stepped into the world of the ordinary courts, unlike even in the Native Land Court, Māori customary law completely ceased to be of any relevance. Cases were conducted according to rules of evidence and civil procedure that derived from the established practices of the English courts. The discourse of the New Zealand ordinary courts was the discourse of English law – the massive edifice of English common law and equity but as modified by New Zealand statutes.
By 1870 British-style capitalism was solidly established in New Zealand. The Māori people were soon to be exposed to it.
VI Conclusion: Capitalist Auckland in 1880
By 1880, R.C.J. Stone believes, Auckland had already overtaken Dunedin as the country’s financial centre. Three major financial institutions dominated Auckland capitalism, all three linked to the City of London. These were the Bank of New Zealand (a private bank, of course, New Zealand not possessing a reserve bank, and it in fact did not even print its own money, but the BNZ did have the government account),63 the New Zealand Insurance Company Ltd., and the New Zealand Loan and Mercantile Agency Ltd. The biggest and most powerful of these entities by far was the Bank of New Zealand, founded in 1861 largely as a result of the efforts of Thomas Russell. (Other key figures in the establishment of the Bank of New Zealand had been Logan Campbell [a kind of merchant prince], Thomas Henderson, and James Williamson.) Photographs taken of Queen Street in the 1880s reveal Auckland as a substantial place indeed, with its main street lined by imposing commercial buildings built in high Victorian style, these including the New Zealand Insurance offices, and the head office of the Bank of New Zealand. Auckland was now a true colonial commercial metropolis, a smaller version of Melbourne or Johannesburg, and a place of real financial and economic clout. All this, within less than half a century of the Treaty of Waitangi. The implantation of British capitalism in Auckland had proved astonishing not only in its scale and rapidity but also in its depth, an aspect of the latter being Auckland’s ties to the City of London, the beating heart of
British capitalism. Queen Street Auckland and Collins Street Melbourne were in many ways replicas of one another, both of them resting on gold rushes and British investors. Auckland’s ruling elite was not landed and pastoral, as it was, for example, in Christchurch and Napier, but commercial and financial. The leaders of Auckland were its “captains of commerce”, notably Thomas Russell, Frederick Whitaker (also at times an influential politician), Josiah Clifton Firth (the “Duke of Matamata”, an allusion to his vast estate in the Waikato), and John Logan Campbell.
Economic historians use the term “crony capitalism” to describe linkages of this kind, where a small group of business leaders are linked by ties of friendship and mutual support and are connected via the criss-crossing boards of interlocked companies and financial institutions, and Auckland from about 1870-1890 is a classic example. The term can also suggest interconnections between business and government, and it is striking how many Auckland business leaders were also politicians, active in two separate but interlinked governments, the national or general government of New Zealand and the Auckland provincial government, both being based in Auckland until 1865, but even when Wellington became the national capital in that year, the connections between commerce and politics remained close. Within forty years of the Treaty of Waitangi, Auckland had developed into a capitalist metropolis, oriented towards the Pacific, and to Māori lands in the Waikato and the Bay of Plenty. The stage was set for a massive boom in speculation in the Māori land market in Auckland’s hinterland, the full story of which will need to be explored elsewhere.
This article has, it is hoped, conveyed something of the richness, extraordinary rapidity, and fascination of the implantation of the legal foundations of capitalism in one of the most remote of all of the major British colonial countries in the nineteenth century. This article was based mainly on an intensive study of reported caselaw during the 1880s, but doubtless much more remains to be learned. The process of commercial statute-making in colonial New Zealand has escaped the attention of New Zealand historians, and might be richly illuminated by comparative studies of the equivalent developments in Australia, Canada and South Africa. A pivotal dimension of New Zealand’s economic and legal history awaits exploration. Was the implantation of capitalism in New Zealand less consequential than the Treaty of Waitangi in New Zealand’s political, legal, and economic history? I for one, do not think so.
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