ROBERT FITZROY AND THE INSOLVENCY OF THE NEW ZEALAND GOVERNMENT, 1843-1845

Abstract

Robert FitzRoy served as the Governor of New Zealand from 1843 to 1845. The colonial government (established in 1840) was already insolvent when he arrived, and its finances continued to deteriorate during his time in the Colony. In 1844, he broadened the Colony's system of customs duties (the main source of revenue), but the Government continued to operate at a deficit. Later the same year, in desperation, he abolished the customs duties altogether and instituted a tax on property and incomes instead. Given that Britain itself had introduced a peacetime income tax only two years previously, in 1842, that was a bold and innovative move; unsurprisingly it failed. FitzRoy also attempted to cover the deficit by printing money, which proved surprisingly successful. Finally, he tried to establish a system of local government, so as to shift as large a part of the burden as possible onto it; like the property and income tax, however, that proved unsuccessful. Britain wanted the Colony to finance itself, but its economy was too small to sustain a government even remotely resembling the British colonial norm. Rather than accept that simple fact, however, the British Government blamed FitzRoy and recalled him to London.

Keywords: New Zealand; history; 1843-1845; Te Tiriti o Waitangi; right of pre-emption; colony; Robert FitzRoy; tax; customs duties; property tax; income tax; land sales; Willoughby Shortland; Te Rauparaha; legislative council; public finance; public debt; Hōne Heke

JEL Classification: K34, K2, K00, H1, H2, H3, N17