The Dominion. WEDNESDAY, JULY 17, 1912. THE RECENT LOAN.

Dominion, Volume 5, Issue 1494, 17 July 1912, Page 6

The Dominion. WEDNESDAY, JULY 17, 1912. THE RECENT LOAN.

SO3IB further particulars of the recent million loan are now available, and we print to-day a summary o£ the prospectus, the substance of the accompanying "puff," some press comments, and a statement • by the Hon. James Allen. The Minister for Finance has not yet received the full details of all the oharges in connection with the loan (since it had only jiißt been put on tho market when the mail left), but he may be trust.*! to require expedition from our London agents and to take Parliament and the country into his confidence without delay—not keep the information to himself,for years as the Continuous Ministry insisted on doing. .The public will not need to be reminded of the strange reticence ol the late Government the loan, and its refusal to publish ewi: the main lines of the prospectus for weeks after the prospectus and the accompanying "puff" l,ad becvi published in the London newspapers; nor has the public forgotten the strange inconsistencies and evasions in Mn. Myf.iis's statements and the statements of other ex-Ministers. The bulk of the loan was required", we now learn, for the repayment of temporary advances borrowed to provide for the redemption of other borrowings; and we commend the the t-ortuousness of this kind of financing to the notice of those few remaining people (if any, indeed, remain) who may fancy that when Now Zealand borrows'she simply borrows in a plain straightforward manner. This' borrowing-several-times-removed has a down-at-beels L.%i&. aai is in itself a fine commejit.

ary on Wardist finance. No wonder the ex-Ministers felt disinclined, where they were not unable, to be frank about the whole affair. We sc:c now that of the 4J millions, nearly three millions (raised on such steep terms) are really renewals of old bills. The price we shall have to pay for the money works out, as Mr. Allen says, at about 5 per cent. This is the price we have to pay for the use of money for two years; at the end of two years we shall have to redeem the 'bonds at par. Mr. Allen expects the net cash received for each £100 bond to be about £97 as.. Wc shall have to pay, therefore, £2 15s. in what a money-lender might call "commission" in addition to .£7 interest—or £9 15s. for the use of £97 ss. for two years. This is an extremely high rate—the highest rate by far for a generation. And it was not even money that the country will have the use of; it is for the most part a borrowing to replace borrowings spent long ago. To put the matter quite bluntly, the country was unable to prevent itself from being bled to pay for the profligacy of the Ward epoch. One cannot help wondering what still more fantastic adventure in the loan market would have been embarked upon had the Ward Government survived the December election; but everyone can imagine the flood of mystifying language, and the disingenuousness and secrecy and boasting, that would in that case have been contrived in order to delude the country into fancying that its finances were sounder than ever. Bad.would have gone to worse; for the finances had obviously got beyond the control of the 'ex-Prime Minister. For some time to come the London market- will not be at all favourable to New Zealand loans, but the new Government can rely upon it that the people of this country know who is responsible for' this. ■ Let a business firm, or a shop, or a hotel, be badly conducted for a long period of years, and not the most capable, earnest and admirable of new managers can clean up themess, and re-establish sound conditions, and regain public confidence, all at once. Nobody doubts the earnestness or.the capacity of the new Government, but it has been lefti a financial legacy by the reckless and incompetent administrations of the past. At the same time, it is unlikely that in any case any prudent and earnest Government could possibly, even, in the" unfavourable conditions created, require to finance the' country on the wild-cat lines pursued in the last three years.