Manawatu Herald. TURSDAY, JUNE 8, 1880. THIS SUFFERING COUNTRY.

Manawatu Herald, Volume II, Issue II, 8 June 1880, Page 2

Manawatu Herald. TURSDAY, JUNE 8, 1880. THIS SUFFERING COUNTRY.

In the Legislative Council on Friday last, the Hon. Mr Waterhouse moved, asking for the production of all correspondence .between the Government and the Agent-General relating to the conversion of the loans. The motion was simply a peg upon which to hang a speech, which contains most important matter. Mr Waterhouse, in a speech bristling l with figures, proceeded to point out some circumstances in connection with the raising of th,e last five million' loan, which " certainly warrant the epithet he applied to them — "peculiar:" VThe case appears to stand thus. Whilst it was the ex- ! pressed intention of the Assembly, when, the lo.au was authorised, that only the £s,ooo,ooo shouldbe raised, power was given to the Loan Agents to convert the. loan under the Inscribed Stock Act, 1877. The Loan Agents at once used this "power, and turned the five million loan at 5 per centy; int<J ■&' pix- million loaii at 4 per cent. The loan wad issued at £97 10s per £100 of 5 per cent. s|fcock, and option was given to money lenders to take -0120 • 4 per cent, stock instead of £100 5 p.er cent. To quotes front 1 ' Mi< - Waterhouse— •j A £97 10s per £100 5 ncr cent, stock/ issued, on' those v ierms, ! would be equivalent to raising a 4 percent, loan at £78 — which was. the price therefore paid by the Stockholders for every £100 we should have to repay. 'Just after the issue of our 4 per cent, loan at £78, the South Australian Government, -under more disadvantageous circumstances, issued a 4 per cent, loan at £92, and it was taken at a premium. The New South Wales Government also got £98 16s 6d ppr £100 for their 4 per cent, loan -r-Jiftd got.£9B 16s.' 6d dt the same price as we had got £78 for. This was so startling a fact — that all possible elucidation should be given the subject." Later on in the debate Mr Hart collected Mr Waterhouse, showing the price of issue for a 4 per cent, stock would be, not £78, but £81 ss. iE]ven after making that correction, it affords food for thought to know that whjlst New Zealand received only £81 '5s for every 'hundred pounds of the loan, South Australia obtained £92, and Kew South Wales £98 lGs 8d for each hundred pounds of the loan they placed on the market. Under these terms, on the six million loan at 4 per cent, the difference be-

tw^4,;^ amount pail for cie 'Tou r South Wales loan and thai Oueri.-] far. the New Zealand would make oar receipts from the loan in round nunii bers £1,055,000 than the sum our I Sy:laoy n.ii^uo.ivri would receive for j theirs. In oilier words, whilst New I SoutliWalo> would receive £5,980,000 I '-v i 1;-; ,) : k "i-uUbn loan at M^o 10a 8^ per £100. ; New Zealand has received ). . V;" £«, ))j,OOO Jo-: i-:s •! .;..}•: *x.i;iiUio'a .oan ai «L'Bl ss. I^j will n-svev^'dessh wot.') £ay hteivn-; o i th » £6,000,0J0, aad refcarn ciiat araoaau to- the bondholders at the expiry of the period for the loan. This news is. anything but cheerful for the colony, _r.e_Yealing, as it does, that there has been in the raising of the loan a dead loss of about a .million of money, as compared with.the terms offered by New South Wales, and accepted by English capitalists. Mr Waterh6use then went on to speak of other " .peculiar" circumstances in connection with the loan. He said : — The loan had been sanctioned as to run for ten years at 6 per cent interest. Now, it was a most evident fact that colonial loans were coming to be extremely well regarded on the Stock Exchange, and the inference was fair fhafc in ten years we oonld hav9 repaid the 5 per cent. £5,000,000 •by the issue at par of a 4^ per cent loan. IfNew : South \Vales could get £98 16s 6d no"V for 4 per cent, we could certainly get £100 for 4^ per cent in ten years, and very pu^sibly make a profit on the bargain. We might have even been able to get par for 4 per cent. By the conversion of the loan we should pay £i lCs per £120 instead of £5 per £100 for thf tan years, which would be a saving of 4s per £100 for that period. But by the conversion of the loan tbe stock was to be repaid iv 50 years, and for the last forty we should be paying £4 16s instead of what need only have been £4 10s, a loss" of- 6s per £ 1 00 for forty years. Reckoning this there would be a saving of 4s per £100 for ten years, whi. h woul^ amount to (with compound interest) £122,000, but against that there would be a lo*s of 6* per £100 for the other forty yeais — a total of (still with compound interest) £ 1,600^000 ; and then at the en'cf of the fifty years we should give the stockholders a bonus of £1,000,ii00. Tbe result, thexefore, would be a total loss of A' 2,600,000, which for all the ffood it would do in the colony might as well haye been thrown into the sea. If the whole of our national debt were converted on the ; same terms, we should for the first ten years' l save £773,1)00 ;, but on the other forty years we should lose the vast total of £14,040,000. Of course the above is an ex parte statement. Nevertheless, it contains facts which are well worthy of consideration. It will be Seen that Mr Waterhouse's last remarks are based on the supposition- that at the close of ten year^ money would be more plentiful and that more favourable terms could be obtained. It may be urged, on the other hand, that should England be involved in a war, or should a heavy drain on English capital take place to pay for the wars of foreign Powers, money may rise in value before the expiry of the ten years, in which case it would be a benefit for the Colony to have its loan settled at the rate agreed upon. This, however, is merely pitting one supposition against the other. At present we have before us the fact that our Loan Agents offered the loan at a singularly low rate, and that acting upon power given to them they at once converted it. Perhaps this may turn out to be a benefit for the Colony, but we are very much afraid that the next generation will endorse the verdict of the Hon. Mr Scotland, that we have •'paid through the nose" for Sir Julius Vogel's services as Loan Agent, and the remarks of Sir Dillon Bell, that "We had made thorough fools of ourselves in giving an eighth per cent, to our Agent for tbe conversion of the loan on his own terms." We may add that an " eighth per cent." would be a sufficient inducement to Sir Julius to convert the five million loan at once, apart from the consideration of whether or not the Colony would be benefitted by such a course.