Land companies played an important part in the agricultural development of New Zealand during the last quarter of the nineteenth century, although few of them were successful financially. Experience in North America had shown that land in areas being opened up for settlement, provided a degree of political and economic stability had been attained, was an extremely profitable investment. These companies were, for the most part, far from being merely speculative enterprises, for their objective was to develop land to the stage where it could be successfully settled by the individual farmer. The companies that were established with the idea of buying and developing land must be distinguished from those organisations, such as the Bank of New Zealand, which became large landowners by default, having advanced money over-generously to land company clients. When these found themselves in difficulties, the financial house had to take over the security.
The New Zealand and Australian Land Company was undoubtedly the most successful of the land companies and it still controls two pastoral properties in the South Island, although its major interests for many years have been in Australia. In the early 1860s a number of unincorporated societies in Scotland held land in Otago and Southland, and James Morton, a Glasgow merchant, set about amalgamating them. The New Zealand and Australian Land Company was formed by the amalgamation of these holdings, the company's interests in Australia being in the form of large pastoral holdings. The new organisation embarked on a programme of further buying, but its farming operations did not prove very profitable and in 1867 Thomas Brydone, who had a wide measure of experience in estate management, came out from Scotland to reorganise affairs. By that time the company owned seven large properties – Edendale, Clydevale, Kawarau, Moeraki, Totara, Ardgowan, and Kurow, as well as a number of smaller ones.
James Morton also had interests in another organisation, the Canterbury and Otago Association which owned five properties – Acton, the Levels, Pareora, Hakataramea in Canterbury, and one Deep Dell in Otago – all of which proved very profitable. In 1865 a young man, William Saltau Davidson, had come out to New Zealand in this company's service and by 1878 was overseeing all its affairs in New Zealand. In that year by special Act of the Imperial Parliament the two organisations were amalgamated, with Davidson the manager in Scotland and Brydone in New Zealand. The importance of these two men lies in their role in the establishment of the frozen meat industry. The company itself faced some difficulties immediately after the amalgamation, as the failure of the City of Glasgow Bank, in which Morton was involved, created some lack of confidence in the company's position.
Apart from its pioneering work in the establishment of the frozen meat and dairy industries, the company's efforts during the 1880s were devoted to the profitable management of its holdings, the selling of land being less attractive on a falling market. In the 1890s and the first decade of this century, the company disposed of its agricultural holdings in New Zealand, a number being acquired by the Government as part of the land for settlement scheme, the balance of the Levels estate being so acquired in 1903.
The New Zealand Agricultural Company was established in 1878 when both the freehold and leasehold portions of several stations between Gore and Lumsden were amalgamated. The directors of this company included a number of men prominent in politics and business in Dunedin such as William Larnach and Henry Driver, Robt. Stout, acting as the company's solicitor. The objective was to develop the land and dispose of it on profitable terms. This same group of men also financed the construction of a railway from Gore to Lumsden. From the beginning the company's affairs came in for criticism as Julius Vogel, the then Agent-General in London, accepted a position on the board of directors, this leading to a peremptory demand from the Premier, Sir George Grey, that he sever all connection with the company. The New Zealand Agricultural Company was not very successful financially, the depression of the 1880s and 1890s and the rabbit invasion reducing the return from farming operations and discouraging land sales. The last sale took place in 1909, the Company's affairs having been administered by a liquidator for a good many years.
Land companies in the Waikato were closely bound up with the Auckland financier, Thomas Russell, whose name was also linked with the establishment of the Bank of New Zealand, the New Zealand Loan and Mercantile Agency Company, and the New Zealand Insurance Company. Others associated with the financing of land speculation and land development in the Waikato included James Williamson, Frederick Whitaker, Josiah Firth, and Every McLean. The principal companies were the Waikato Land Association, the Auckland Agricultural Company, and the Thames Valley Land Company. In 1890 a return prepared by the Commissioner of Taxes showed that these three companies held over 350,000 acres of freehold in the South Auckland area. Included in the Thames Valley Land Company's holdings was the controversial Patetere Block on the edge of the pumice country. The history of these companies followed a familiar pattern. Formed to develop the land for sale, most of it in scrub and swamp, they were caught by the general decline in prices, the unexpectedly high costs of development, and the inability of the Waikato soils to sustain permanent pastures or to grow satisfactory annual crops. By the early 1890s most of the estates had fallen back into the hands of the Bank of New Zealand, and the depreciation in the value of these assets and the inability to realise upon them was a major factor in bringing about the bank's difficulties in 1893 and 1894. Formed to dispose of them, the Assets Realisation Board's task in carrying out this function was of course assisted by the rise in prices from 1900 onwards and particularly by the expansion of the dairy industry.
In the Waikato successful closer settlement was very dependent upon raising the fertility of the soil by topdressing and this did not become common until the years immediately before 1914. Despite their shortcomings, however, the land companies made an important contribution to the development of the country, especially in areas where such a task was beyond the resources of the individual settler. This was especially significant in the Waikato where the cost of development was high. The improvement programme on the estates included clearing the scrub, ploughing up the land and, after a winter fallow, working it up in the spring. Any pastures so established were giving an indifferent return after three years and had to be broken up again. Dairy farming was impracticable in the 1880s and the return from sheep and beef cattle, especially the latter, was limited; all attempts to establish a system of mixed farming on the South Island model had little success. And yet without the development work carried out by the companies, the establishment of the dairy industry in the Waikato would have proceeded more slowly. Topdressing, the farm separator, and the milking machine made the one-man dairy farm an efficient unit; but the dairy industry in the Waikato was established after the initial development work had been done by the land companies.
Apart from its association with the pioneering of the frozen meat and dairy industries, the New Zealand and Australian Land Company, and those in the Waikato, did much to raise livestock quality. The Levels Corriedale stud dates from the 1870s and the company also imported the first Aberdeen-Angus cattle.
During the political controversy over closer settlement in the eighties and nineties, the land companies were the target for constant and often unfair criticism as they appeared to be the personification of the two evils of aggregation and absenteeism. Despite the pioneering work that they accomplished, it was evident by the 1890s that the New Zealand social and political climate was hostile to them. Within a decade or so they had ceased to be a conspicuous part of the rural scene.
by Patrick Russell Stephens, M.A., Economics Section, Department of Agriculture, Wellington.