MESSRS. ROTHSCHILD AND THE FOUR MILLION LOAN.

New Zealand Times, Volume XXX, Issue 4363, 15 March 1875, Page 2

MESSRS. ROTHSCHILD AND THE FOUR MILLION LOAN.

TO THE EDITOR. Sin, —I think the Post has jumped at a very false conclusion. The great house of Rothschild are loan contractors, and not loan agents, I never knew the firm in any other capacity than contractors, in the many loans they have brought on the money market. It will be asked, perhaps, how do they get any advantage if they place the debentures in the hands of the public at the same price at which they make the contract? Now, the reply is, that they retain for themselves a certain portion, perhaps a million or a million and a half, on which they will gain a profit of about 21 per cent., or about £22,000 to £30,000, according to the amount of debentures they retain for themselves. This profit I will show —further on—and I think it will be found that the colony really receives 03 net cash.

On the 12th January, previous issues of 44 per cents were selling at 1)84. This is doubtless correct. The Stock Exchange dealers (jobbers) were selling at that price, but there is a margin of about 1 per cent, between buying and selling ; so that if a holder of these debentures (I mean one of the public, and not a Stock Exchange man) had been a seller, he would in all probability have got about 974 > however, we will say in round numbers 974. Now comes a very important fact, which leaves no shadow of doubt. At about the time Mr. Vogel made the new 44 percent, loan, there was a dividend for the past half year just due on the previous issue of 44 per cent, debentures. This dividend fell due on 15th February—viz., 24 per cent., ergo, after the 15th Feb., the debentures alluded to would be quoted ox dividend. Now, fixing the medium price at 074 on the 12tU January, the date named in the it will make the price, on the 15th February, 95} ex dividend. This, of course, upsets the statement in the Post about a depreciation of over 5 per cent., even if the colony actually receives 93 net. Now, I look at the matter thus;—Rothchilds, and those who took portions of the new loan, gave 93, when similar debentures of a former issue were about 054This leaves the profit I spoke of before, viz., 24 per cent. Thisprofit.it must be remembered, covers a great amount of contingent expenditure, ami a certain amount o! ri ik—always attending transactions of this nature. At Home, if the Chancellor of the Exchequer had a large loan to raise, on a creation of consols, ho would bo obliged to submit to a depreciation of at least li per cent, on the current market price of consols, and would be content to do so.

Let me conclude by pointing out, that like any marketable commodity, debentures, stocks, shares, &c., are liable to rise or fall in price, according to supply and demand. Now, Mr. Vogel had a large supply to place on the 'market, and from my experience, 1 do not hesitate to say that he concluded a most fair and equitable contract.—l am, &c.. Stock Exchange. March 12.