THE LATEST LOAN.

Dominion, Volume 6, Issue 1674, 14 February 1913, Page 4

THE LATEST LOAN.

The Minister of Finance appears to have successfully arranged for the flotation of the loan which was the main cause of his present visit to London. We are told to-day that the amount of the loan is three millipns, that the rate.of interest is 4' per cent, and that it is to be issued at 98. The Westminster Gazette appears to have taken up an antagonistic attitude over this loan and is reported to have expressed the opinion that New Zealand is "overdoing it" in asking for three millions. Financiers, it says, did not expect the Dominion bo demand anything like that amount. This latter assertion is a little difficult to credit in view of tho tion available to those-interested in colonial flotations. It was known that the money was needed, and although the state of tho money market was far from encouraging, it-would have been inadvisable on the part of tho Government to further delay the issuo of tho loan on the prospect of a better condition of things prevailing later on. The information available at the moment is not sufficient to enable a definite calculation to be mado as to the exact cost of the loan to the country, but it would seem that in the circumstances the transaction has been a very satisfactory one and compares very favourably with recent loan flotations by the Mackenzie and Ward Governments. The last loan raised by tho Dominion was that of tne Mackenzie Government in June last—4 ; J millions at 3| per cent, tho terms of flotation being such that tho actual cost to the Dominion worked out at about 5 per cent per annum for tho two years for which the loan was secured. At that time it must bo borne in mind the condition of the London money market, though not as satisfactory as it might hare been, was more favourable than it is today. Then our four per ccnts wcro quoted at £102 10a., whoreas on Fcb-

ruary 7 last, they were quoted at £100 5* To-day there is the Balkan w . n {>. ill its attendant possibilities, disturbing the finance of tho world. "Despite this, however, Mr. Allen seems to have been able to provide for the raising of the present loan for a period of between 30 and 40 years on terms which should work out at a cost of a little over 4 per ccnt per annum. The departure made by the Massey Government in abandoning tho risky short-dated loan method of finance of its predecessors should have a good effect in _ assisting to remove an unsettling influence. There are times, no doubt, when short-dated issues may be desirable, but it had practically grown into a settled habit with the Continuous Ministry to pursue this method. Commont'"g on the loan raised last year by the Mackenzie Government, the London 'J'imes, after ex-pressing tho opinion that a short-dated . issue was then probably'the best way out of a difficult position, added: "In the opinion of one good judge it would have been better, however, to have financed the issue of a long fourper cent loan at a trifle under par than to pay possibly a good deal over lour per cent for a chance of renewal two years hence." The Massey Government has followed the course , here suggested' of issuing a long-dated loan at 4 per cent, and appears to have met with, what must in the circumstances be regarded as satisfactory results. This is the third Australasian loan raised this year. On January 3 Tasmania placed a loan of £1,300,000, bearing interest at 4 per cent,, and the underwriters had to provide 72 per cent of the money. On January 11 a 4 per cent Queensland loan for £2,000,000 was issued and the underwriters had to find 81 per cent of the total. It will probably bo found, also, in the case of the New Zealand loan just issued that the underwriters will bo called on to. find a large proportion of the money. Last year they had to find 87 per cent of the 4i million loan- raised by the Mackenzie Government, despite its, from the investors' point of view, very attractive terms, and it will be interest-, ing to. observe whether' the publicsubscribe more freely on the present occasion. - It is satisfactory to note that the Prime Minister, while pleased with the result of the' loan negotiations, has not lost sight of the necessity for the • exercise of proper care and economy. The exercise of care and judgment in the spending is quite as important as tho use of Similar qualities in the borrowing.