THE BIG LOAN.

Dominion, Volume 4, Issue 1042, 3 February 1911, Page 6

THE BIG LOAN.

■• . • OUR BAD BARGAIN. AN 'ACCOUNTANT'S ANALYSIS. (By Tclccraph.-Spccia! CorrceDonaerU Cliristcliurch, February 1. "An Accountant" writes to the "Press" to point out tho actual position as regards the five million loan as worked out by. an expert accountant. Ho says: "From the official prospectus I find that tho. loan was apparently issued at the price of .£9B 10s'. per ,£IOO, tho investor having the right at any time before December 31, 1913, to convert tho bonds into inscribed stock bearing the same ralo of interest. For the benefit of the uninitiated, it may be stated that :th'o difference between a bond and inscribed stock is that in the case of a bond-holder, should ho lose his bond, which is payable to bearer, or should it be destroyed by fire or otherwise, he runs the risk of making a total loss, whereas by'having his name as a stockholder inscribed (w registered) in tho books of tho Bank of England he is 'as safe as .the bankV' ■

"It will bs seen (hat - ther bond-holder who converted into stock at any time before 'Deeeiubsr 31, 1913, gains a bonus of. 31 per cent, (the deference between .£9B 10s. and but this is not all. Should he have converted before Decembor 1, 1910, ho will have received in addition a further bonus of £2 os. 7d., inado up.as follows:— Five months' interest on ,£lO2 at 3} per cent., £1 9s. lOd. liebats on instalments of loan paid in advance at 31 per'cent., 10s. 9d. '-"In effect, therefore, 'the.loan was offered to the investing public at the price pf .£94 10s. per jCIOU.\ With such terms it wns doubtless expected that tho loan would 'go off' like ripe cherries, but we all know what n deplorable fiasco it turned out. Lest I should be accused.of misrepresentation, let mo quote from tho prospectus of the loan: , "First: 'The instalments may bo paid in frill- on or after November 28, 1910, under discount at the rate of 3| per cent, per annum.' (This accounts for the 10s. 9d. above mentioned.) "Second: Thoso who pay in' full and convert their allotments on or before December 1, 1910, will receive a full six months' - interest on the - stock on Janu-aryl,-1911. (This accounts for .£1 9s. 10d., making in all os. 7d. ; as above mentioned.)' .. '.. . ";". .'-. . "No ,one knows the above-facts better than our Prime Minister, and yet, with the unblushing effrdntery of a stump orator, he.goes about the country throwing dust in the'eyes'of the people. No wonder that'thinking men. look'grave, and that diir credit is on the wane. On reference, I find that our 3-V inscribed stock was quoted, at ,£loo.los. in January, 1908, whereas to-day tha quotation is £%. Should it, bo retorted that all colonial, stocks have fallen, let me' state that little" Tasmania shows a decline of only £2 per cent, on similar stock." '