THE CREDIT.

Dominion, Volume 2, Issue 417, 28 January 1909, Page 6

THE CREDIT.

PAST AND PRESENT BORROWINGS. ]:: v.. i.' ,(Tq'the Editor.) in the late Mr. Seddon's time politics have usually been allowed a brief respite after Christmas,'but this year Ministers have; sought no such, rest, and their feverish activity has been astounding. It m V;. t '!' ere ? or e> .Pot', bo out'..of place to consmar- the significance of: the recent cablegram .announcing \ the."sals;in London of £600,000 worth, of-Ne\v,:Zealafld bonds,, with seven years ourrency,,.carrying.four per cent, interest, and sold ata premium of 1 to 1 per cent. Apparently these bonds were sold, privately,' and_not by' publici-tender.. That'they were so disposed ;of, and:the terms accepted would alike be., oh the, advice of financial experts, andliccordingly,we'may conclude that these were the'.'best j terms, under .which our Treasurer oould.raise the amount he required. No one knows better than our Hon. Premier and Treasurer,,or.has more frequently set out,thegreat importance of cheap money to a Govern-' mo'nt ancl:to the community in the varied relations .'.of life. In: 1895, when our. debt' was j eomparatively:sm'au' and our public credit good,-Sir, Joseph (then, Mr:) Ward floated a loan for, one and - si' half millions at 3 per cent., -and without',the - loan being underwritten.. This issue had fifty years' currency, and..was .sold.at an.average of £94 Bs. 9d So.goodwas.the, credit of New Zealand then that. Sir Joseph,, in. his following" Budget speech, -was-enabled to indulge in a ; small crow over, both/Queensland and Western Australia,'colonies which had been on the'market with .loans..at:3i per:cent.\ After dilating on the relative-merits ,6f: these loans, the hon. gentleman added :"I am. justified in feeling, a prbfound'seris'e of .satisfaction at having been, in, my.hunible',way, the;associate in carrying to ; a-. successfid; result what, ,'in my opinion, termed: a .splendid, operation—an operation .which,; b.'addition to the enormous advantages gained by, bringing money down 10 a , le Xel,.™at admits .of'it being profitably employed: by-those'who require'it to develop the-industnesahd commerce of thecountry, again enables New-Zea!ahd:to lead the van of new and; beneficial undertakings amongst hercontinental, neighbours." . Surely a statement; which is.pregnant'with economic fact'' oyfl , n '.."'.:K .is: tinged, with. a', shadow, of high'Joseph/ further.'•';elaborately, dealt .with .the,solid advantage arising from floaW.such.a loan, at 3 instead of per W jjoFq ' :^ realised „of only ;f 9 t ßs - 9d.,;he found it yielded a savins £206,250,: and enamoured' with the possibili- &. £ g T& ¥*^t before the conclusion of his speech,;that.m the,margin to be gained 'by-the-conversion-of; 'our public.debt to the Sw 1 *- u ,°W. ain f < i.:.lay a means that could and should be used for the "extineuish:S 6 rt <)^ U v I)lll, l, i a de i )^, As further/evidence of. the. bgh_credit, of. New Zealand in those early days of.the.Seddon-Administration, that hon; gentleman himself, early in 1899, floated' U» lo tb o °v 3 v P er cent - long-dated '■■ bonds, and at the higher average of £96 lis. HowS B; iS*? ideiloe of th « listing ; good credit of .the, colony,;-Mr. 'Seddou, although equally impressed with theadvantago ;of - cheap, money .and .belief .m tKo advantage made little progress with the proposed, task; of -converting'our debt into l,„n e / 0 Tu °^ : /outside; .of. certain .of the bonds held .by\the Departments,, but he was able,, as .shown-in' table ; No. 10 of 1896 to' convert ; ,over Ive millions into 3 i per -.cent .From the flotation of,,the-present at iourper, cent- and, the/ fact, that oi.S % the,Department;our Government has for over ■ ; W& y fZ S^ *'- iP ay -'^■ ? iniil ar, .Price: both ;here,.and jn .Austraha; ,it. ; i B eviderit' that tU a ; " 1 M rk^ ff all f'-B, rowin g advance on- ? S ' .of. the money.it •requires. Now, to. what is this due? Money m London.is quoted at,3 per cent., but urifijyf, ?S°- &*- rate at; the- Bauk of toglatid had long stood at. 2J per cent.,, so ■that..- it; appears .there is no. escaping .from .the.regrettable- fact 'that' the "credit of New Zealand is now: much lowered. ' : ;-The;.- general "impression -in -the community, -that t£e;credit ; of the State is'inexhaustible ; .R ut .t. h . e ii cr SSlt.,pf, wealthy State hasits. limits,, and: if.;it; is that.-our laree' debtwhether.profitably .used- or-nbt-haf deeplv unpaired our financial'status, then the mis'conception is indeed important, and the improvement of,tha position will be difficult and ] tedious.; V Agam,.it;is.probable that our .credit has been; acutely affected by our larce issue,of,short-dated;debt, instead of by stock with, 40'. t0..50. years! 'currency and with an '.- I! ' x pnange;quotatiqn. : .;Then, further, for reasons_. which the; Treasurer.can alone'explain"l •nerhas,;/chpsen,;df.Jate;-years' to. 'borrow: •mainly, .within ;;tho..'c'olonies, "■ so drawing'"on I •their, hmited. resources until, capital is'not -now available for the 'assistance of ■ citizens as, settlers; or m. carrying on and extending o, ?'i. o- ustnes and ' commerce—features to which.Sir Joseph,.as quoted,- drew special attention so long ago. When our recent' financial .experiences''are considered, capped bv the hard fact; of.the price/which the'countryhas.had to .pay, for this London loan, one is at the change in the 'market conception of;our; -solvency, since the'days -when ,after_the'-:,bnef''term; of.:self-reliance under Mr. Ballance, Sir; Joseph was, enabled;' to ; .effect : his 3-per'.oent./'ffotation.!• Surely the position demands the. attention and examination of every good and patriotio,citizen. . , - Then,, along with/these'financial anxieties, ffl'gntl.refer to another momentous change? Ihe/Government has for long,years had-an ,almost;>free hand in'adjusting'the relations of, labour, but; in; place of the peace and concord ■'•promised- -and looked for, we seem to have;: arrived, at: ah /era of strikes : '-■■ and turrnbil; accompanied; by' bitterness and en•nuty between. classes. ■'''-■ The:' whole position is;;.beconi}lig/'deplorable..'.. While'. recognising it, A there;/is "probably, as yet no need. to be downcast;/but,, putting.faith in our, British | instincts .-and; in /natural advantages, of | the. country, rather let .us bestir, ourselves to .•bring a !better:condition about; when, with confidence:, enterprise will be,re-in-hope that prosperity willvyet;: again: prevail' throughout this fair arid/fruitful.land/—lain, etc.,' ;;-. x ■