The Feilding Star. THURSDAY SEPT. 25, 1884. The Budget

Feilding Star, Volume VI, Issue 44, 25 September 1884, Page 2

The Feilding Star. THURSDAY SEPT. 25, 1884. The Budget

The Financial Statement, now under debate in the House, is cleverly . framed to give something to everybody and to create the impression tbat this J is to be done without borrowim; hi y vly , . which was what the public yi'i'yaiiy t feared from Sir Julius Vo ;.:l. Thf main feature in the Statcincrt i.y of . course, the application of the ranking ; fund to the relief of the reveuuo Ai the first place, the annual payments thereto amounting to £214,000, and afterwards the accrued sinking fund, which amounts to about three millions. Now all this means borrowing to the amount of these sinking funds. The •public debt in round numbers amounts to .£32,000,000, but against this there now exists a balance to credit of the sinking fund of three millions, which practically reduces the debt to .£29,000,000. In the Financial Statement Sir Julius says that during the process of conversion large masses of the sinking fund will be set free, to be made availablo for public works, which would obviate the necessity for fresh borrowing of equal amounts. It must be patent to everyone that if the sinking fund of three millions, which reduces the debt to twenty nine millions, is spent during the process of conversion, it is equivalent to borrowing an equal amount. The same rule would apply with respect to all present and future contributions to the sinking fnnd, which it is proposed to utilize in aid of revenue. Before the money can be touched it must be set free by the bondholders inscribing, and as this is a purely voluntary act on tlieir part, in order to fulfil his scheme Yogel will have to borrow m anticipation of probable conversion, and will have to offer inducements to holders to convert their bonds into inscribed stock. On the face of it, with New Zealand bonds above par, these will not convert bonds worth£ 103 and bearing 5 percent, interest to get £100 worth of inscribed stock bearin;---4 per cent. The only reasonable inference is that Yogel, to hasten the process and enable him to utilize the sinking fund, will give an amount of stock for every £100 debenture sufficient to make it worth their whilo, which, at present prices, would mean £120 worth of stock. No doubt the inscription of the Bank of England has a certain effect in adding value to the stock as compared with bonds, as it makes it an investment which trustees are allowed to deal in, besides giving it a status in the eyes of small holders of bonds which our securities do not possess in themselves, but even with the latter, very strong inducements will have to be offered to induce them to convert to any large extent, and it is on this the whole success of the scheme depends. Wo will now take the proposals as they stand and see what fresh liabilities it is proposed tho Colony should be saddled with. Thore is the unraised million of the three million loan (which, by the way, is already expended) ; the North Island Trunk Railway, one million ; Nelson extension southwards, one million ; East and West Coast Railway, Middle Island, one million ; Otago Central, one million ; proposed loan, as per Statement, one million and a half; sinking fund, to be set free, three millions — a total of ten millions and a half, which is the borrowing actually proposed in the Statement, though concealed with a rosy-tinged cloud of words. This is the leading idea of the Statement. Of course we do not lose sight of the fact that the East and West Coast, Middle Island, and the extension southwards from Nelson are nominally to be made by syndicates, but it is stated that the Government afterwards are to work the lines, which simply means that the syndicates will construct these lines on terms profitable to themselves, and that the Colony wiU have to buy the lines or pay interest on tlieir cost to the syndicates. This is only borrowing under another form, and, from the nature of the transaction, under more onerous conditions. We will continue the consideration of this subject in our next issue.