The Gisborne Times PUBLISHED EVERY MORNING. GISBORNE, JULY 19, 1901. CONSOLS AND BORROWING.

Gisborne Times, Volume VI, Issue 161, 19 July 1901, Page 2

The Gisborne Times PUBLISHED EVERY MORNING. GISBORNE, JULY 19, 1901. CONSOLS AND BORROWING.

A xew question in regard to the raising of money for local purposes, is mentioned by a correspondent, who writes • £ " There have been many tnforesting letters in your journal latel3 r , and I would like to ask information on a subject that perhaps lias a bearing on local matters. What is the cause of the fall in Consols, as noted in the Times, and is it likely to affect borrowing for water and drainage ? ’ The cablegrams, our correspondent might have noted, explained that the reason was because American and Continental investors in the war loan had boon “unloading” their stock. Some had no doubt bought in the hope of a premium being obtained, while others had found it necessary to withdraw their money to utilise it in other channels. On looking up the records we find that since 1890 Consols have declined by 22 1-Sth. They had then reached as high as 114. Sinco then the war has necessitated heavy borrowing, and therefore the bi" supply has caused the article to cheapen. “ Consols, 1 a writer on finance explains, “is the promise of the British nation to pay for a term of years two and three-quarter or two and a half sovereigns a year, and at the end of the term £100 ; When the nation is spending millions on. war, apart from all considerations or victory and defeat, the promise will naturally decline somewhat in value.” Ihe financial writer goes on to show how war affects Consols, the defeats in 1899 sending them tumbling, to bar-

den again when Lord Eoberts took control of affairs. The rate of interest on Consols being fixed their price naturally suffers by the better terms obtainable in the classes of colonial securities now open for the investment of trust funds, and also by the- general hardening of the money market. Prior to the recent fall, the same writer stated : “ The American panic has not been without elfect on the recent decline. To pay for the shares which the great millionaires have bought, it is said that these latter have had to sell part of their holding in Consols. In England, too, there seems to have been some realising on the part of the small speculators, who applied for the new Consols in the hope of securing a premium, and who have been alarmed at the decline.” This information should give the unitiated a fairly clear idea as to general cause and effect in regard to consols. As to what the effect may be on local borrowing for Gisborne and such towns, we think there need be little concern. The prices to borrowers will probably harden until the war is over, and then there should bo a docliuo for good securities.