FIVE MILLION LOAN

Dominion, Volume 4, Issue 990, 3 December 1910, Page 5

FIVE MILLION LOAN

MR. MASSEY UTTERS A WARNINC. "MOST SERIOUS REBUFF COUNTRY EVER RECEIVED." STATEMENT BY THE PREMIER. In the House of Representatives yesterday Mr. Massey, Leader of tho Opposition, in referring to tlio five-million loan, said he did not want to make political capital out of it, but it was the most serious rebuff the country had ever received. Sir Joseph Ward: That is not tho opinion in England. Mr. Massey: AVell, our 3-} per cents a-ro only !)G, while tho. Tasmanian 3J ! per cents are standing at 96 notwithstanding the fact that in our case half a year's interest was due next month. Continuing, Mr. Massey said that the , position, however, was only to be expected under the circumstances because £5,000,000 was far too much to borrow at one time. In the words of the late : John Ballance what had happened in I connection with that loan was enough to make somo men pause. The Prime Minister Explains. 5 la regard to the five-million loan, the r) Prime Minister said there was no occaj sion to talk of having "warned the j trovernment." Tho country had every g reason to bo proud of the result of the g flotation of that loan. The Bank of 1 England rate of discount at that time _ was 5 per cent, and according to a 3 cablegram he had received that morning, it was now 4} per cent. It was highly satisfactory that, when the g Bank of England rate was 5 per cent., L this country, with'some of the strongest . and best financial men in London, floated its five-million loan at per s cent, and it was taken up at £93 10b. though ho knew that one newspaper writer stated that it was put on the market at £96. A member of Parliament had called on him to ask him 1 whether it was true that the Bank of G New Zealand had luulcrv/rittcn -fche _ loan. That also was absolutely untrue. 7 Tho Bank of New. Zealand was never asked to underwrite the loan and if it had taken any portion of it, that was not done at his suggestion, and it could not have been moro than £100,000. If, tho Bauk of Now Zealand ; g had wanted to underwrite the five-niil- ) lion loan, he would not have been j' agreeablo to it. Tho Bank of New j Zealand was a strong bank and was doing very well, but ho would bo sorry to see it underwrite a loan of five millions. Tho flotation of the loan in London on tho terms he had mentioned 2 a most gratifying proof of tho esteem in which New Zealand was hold by London financiers. He doubted whether any other country would have done better, or as well. w Mr. Massey: Don't forget the two la Per cent, for conversion^ 1(1 "Not Making Any Losses." id Sir Joseph Ward said ho had taken that into account. Those who had i, taken up tho loan in tho Old Country in jvero not making any losses on it in letting it out to their clients, and lie 18 believed that they and their clients would do very well out of it. Furthcr;h more, for .this country to have its fins. ances all fixed twelve months ahead ro "'as a very fine thing indeed for New Zealand. His answer to those who said b, that five million was too much to rais< []- was that it had been underwritten ai jh £98 103..at 3£-.por ccnt. • Bcfor© put' ting the loan on the market he hac consulted two or three very experiencec financial men at Home. He was ad vised that if they put only a two millioi loan on tho market, the results woulc not have been nearly so satisfactory when at Home he talked of a fou; it. million, loan, and he was assured bj financial men with a lifetime of finari cial operations that it would bo bette! to have a loan of that amount, than o: m alf sum. If a local, bodv wanted : a loan from Homo for £100,000, it coulc get it at better terms. than if tin . amount was only £50,000. When it was a large loan, and several largo financia houses were interested, their power mad< "1 for succoss. . That was what had' occurred in connection with this particular loan. Tho loan was the largest New Zealand had floated. It containcc £1,250,000 for the. building of th( Dreadnought. Wo could have done with £375,000 if provision did not . require to bo made for the, vessel. He would not discuss on that occasion the value of our having taken our share in "• tho naval defence of the Empire. To give a comparison of the Tasmanian 3J pel ccnt stock with our own stock was noi • e _ on all fours. With our five, million loar 'bping unloaded by various houses or their clients, everybody must oxpeel that thero would be: a decline in our 3j per cent stock. Then, again, Tasmania had not been on the money market foi <» a big loan for many years. n. Worst Aspect cf the Transaction. Mr. Herries said that he would noi bo prepared to discuss the flotation ol the five million loan until English newspapers were to'hand reporting it. Mean time he would mention that a largei proportion of tho loan had been taker on up by the underwriters than had beer the case with any previous New Zealanc loan, but there might be an explanatioi of this. Our ordinary stock was dowr to £90, and that was the worst aspccl ISj of the transaction, because the stock o! - c . New South Wales and other countrie: had not fallen. Wo had 1 floatec £6,850,000 in one year. ■ Ho would verj much like to know the cost of . floating all the loans, and he thought detail; should be laid before Parliament, a: was done up to the year 1905.