A Financial Letter.

Manawatu Standard, Volume XI, Issue 1680, 9 April 1886, Page 2

A Financial Letter.

(Snecial Correspondent N.Z. Times.) • London, Feb. 25. Strange to say, there is nothing bat bad and indifferent news from New Zealand .-.ati present. Letters appear m metropolitan and provincial papers dwelling on this theme. Froude and Sola write discouraging accounts of the Colony. The burden of their song is its heavy indebtedness, and the depression that exists consequent on weighty taxation, and the low price of New Zealand produce. Then, there itf fear that pernicious borrowing, on a large scale, ii contemplated. A few weeks ago it was announced that early this year a New Zealand loan for £1,500,000 would ;ba asked for. To this your Agent-General replies, that it would be only £1,000,000 for North Island rail ways,, and even that might require the sanction of your next Parliament before being issued. More gerious still was the report that your Government intend to propose, m the coming session of Parliament, a loan of from eight to ten millions sterling, TBia caused some excitement amongst holders of New Zealand debentures, and was received with alarm, which subsided af tor the communication of Sir Francis Dillon Bell, as may be judged from the following extract which appeared m the Daily .News on the 3rd instant : — ; " The recent and tardy denial of the reportß^frbm Australia, that New Zealand was about, to ißsue loans for eight or nine millions has had much to do with the revulsion m the market for colonial stocks, which are generally strong." How. often do we hear well-meaning New Zealand colonists speak with pride on tbe high state of tie credit of the Colony on the London money market ; but how seldom do they compare this with the ruinous loss arising from the low price of staple products of New Zealand. What an insignificant gain is half per cent, of interest on a loan of a million of money which is raised at 4 instead of 4£ per cent. It is but a saving of £5000 a year . Compare this with the millions of hard cash lost of the unprecedented fall m the value, of lsew Zealand wool, wheat, tallow, and frozen meat' during the last three years, and the sum I have named looks very small indeed. It is a long lane that has no turn, and though on wool there was a fall of 12 per cent, m 1886 on the low prices of 1884, though best New Zealand wheat was selling at from 28s to 33s per quarter, and thoupb. tallow suffered a fall m rates to the extent of 45 per cent, during the Jast two yean : yet, I understand, it is the opinion of imp^rters here that the bottom of the well of depression, as regards colonial produce, has at last been reached, acd that during the next three or four years, though there will be no " leaps and bounds " m business there will be a gradual and satisfactory improvement. In the meantime it may be fairly asked, What is to be done to relieve the pressure ot the present depression and place New Zealand finance on a sound . footing? To borrow, say, only eight millions more would make matters worse, if it did not lead to. colonial bankruptcy. Once an eight millionioan bill is passed, it may be taken for granted it would all be raided before the end of the next five years, and as our .credit m the London market would be impaired thereby, there would at 4£ per cent, and including the cost of raising the loans, be a further addition to the burdens of the Colony of £360,000 per annum. This too, to be borne by about 590,000 men, women and children constituting the population of New Zealand, and m addition to the present great taxation imposed upon them. It may be argued that the eight millions would be mostly expended m new lines of railways ; hut, if the wall-tried experience of the United States is to be relied on, it takes a population of 800 per mil* on a cheap line of railway to make it pay the constructors. From this it may be, inferred that with your present population the more lines of railway yon make the less profit the whole mileage would yield. Then, would the Bank of England consent to issue such a loan ? and, if so, where is the money to pay in* terest to come from ? The answer is " Increase the property tax and other impost." Yet taxation has nearly reached its limits for both rich and poor. It ought to be remembered that above a certain rate a tax ceases to be productive, for, from its being oppressive, many persons won't pay and others evade it. New Zealand has great resources. The elasticity of its revenue has been surprising ; but there are evident signs that this is at present no longer the case. These signs. I hope, prudent statesmen will not fail to recognise. At present a delusive system of finance finds favor with your Govern* < ment. [To be Continued. [