THE LAST SOUTH AUSTRALIAN LOAN.

Globe, Volume XX, Issue 1557, 14 February 1879, Page 4

THE LAST SOUTH AUSTRALIAN LOAN.

| “ Adelaide Observer.”] 1 The worst item of news for the colony that ■ we have had to record for a long time is that contained in our commercial telegrams from ; England. The Agent-General, it appears, I has disposed of the whole of the unsold balance of the last South Australian Loan, but at the ridiculously low average rate of £6B os. This is the lowest amount at which •we have parted with any of our 4 per cent, bonds. Contrary to the gloomy predictions of Sir Henry Ayers, who, if we mistake not, gave £B7 as the maximum rate for this denomination of South Australian securities, our first 4 per cents., sold in May, 1874, realised an average price of £9O 7s Bd, or more than £3 in excess of the figure now accepted. The next tendered for in January, 1875, was floated at £9O 3s 3d, but for the other five loans much higher rates have been secured. It is a most anomalous and unsatisfactory circumstance that at a time when New South Wales 4 per cents, are quoted at about £9B, South Australia should have to accept nearly £lO per cent. less. It is not as if there was anything in the condition of the colony to account for this enormous discrepancy. Prosperity abounds here, and the prospects for the future are cheering, notwithstanding that the present is a peculiarly anxious time for Q-overnments all the world over. Of course it was known that the price would not approach that of the New South Wales securities, and considering the quotations Sir Arthur Blyth in issuing his new loan could not have looked for any great advance upon the rates obtained. For weeks our Four per Cents have not been worth more in the market than £93. When the new loan was announced there was a drop to £92, if not to £9l, Victorian securities declining in sympathy with ours. At the beginning of January the coupon had te be cut off, accrued interest being thus wiped out, it may be assumed that the quotation became still further reduced by 2 per cent. Thus at the date when tenders were received the price of our 4 per cent, bonds must have been from £B9 to £9O. Under these circumstances it is not surprising that the average offers for the £559,200 have not gone beyond £BB ss. But there still remains the question why was the present most unpromising time selected for putting the new loan upon the market ? The only answer that occurs to us is that which we have before given—namely, that the Government, in the hope of a recovery in rates, had staved off the day of issue to the latest moment consistent with the maintenance of the colony’s credit. If this is so, they of course had no alternative but to raise the money now. Whatever may be thought of their judgment in postponing the sale of the bonds month after month until financially they had been reduced to the direst straits, no one can blame them for having preferred the alternative of a heavy discount to the postponement of the day of settlement for even one of their many obligations. Bad as it is to have a first loss of many thousands of pounds, it is infinitely better to suffer in this direction than to breed distrust among the creditors of the colony. It need hardly be added that, to make good any defence of their action, it is essential that the Government should be able to show that there was good reason for expecting an early advance in rates ; if so, that every conceivable means of raising money temporarily was resorted to by them before they made up their minds to appeal to English capitalists. The sale of bonds at £BB 5s is a disastrous piece of business, both in the interests of South Australia and of her present bondholders ; and, as we have before urged, it is incumbent on the Government to show that they only yielded in the lest extremity of pressure to so serious a sacrifice as that which has been made. It is further important to know what is the position of the Agent General in the matter. As the financial agent of the colony in England, upon him must rest a large share of the responsibility connected with the issue of loans.