New Zealand Times. (PUBLISHED DAILY.) WEDNESDAY, OCTOBER 13.

New Zealand Times, Volume XXX, Issue 4544, 13 October 1875, Page 2

New Zealand Times. (PUBLISHED DAILY.) WEDNESDAY, OCTOBER 13.

Some months ago, whilst a committee of the British Parliament, under the chairmanship of Mr. Robert Lowe, was sitting to enquire into “ Foreign Loans,” considerable stir was excited by the publication in the newspapers of information that the committee had obtained. A question of privilege that created no small stir was raised at the time, and attention was drawn to the exposures made as to how certain “ Foreign Loans ” effected in the British money market were but in reality British and Foreign swindles. The committee have now published their report, and the interest created in the matter, which had for a time died away, has been quite renewed. The histories of four -loans, as detailed before the committee, reveal a state of things almost without parallel. The first of these loans was that of Honduras, and the London papers detail the facts in connection with it, which are enough to astonish the little limited money rings of New Zealand, whose petty financing dwindles by contrast into an insignificance that makes it scarcely worthy of notice outside the colony immediately affected by it. The Honduras loan was effected in 1867, bat its history dates back as far.as 1861. In that year aDoNOARLOS Gutiberes, clerk in a Liverpool mercantilehouse, “turned” Honduras Minister. The word turned ” was used by a witness before the committee, and was accepted as most fittingly descriptive of the mannerin which Gutibeebs became the representative of a nation. From the outset this gentleman found himself in a difficult position. He had of himself no resources wherewith to meet the expenses of his embassy, and the Government which he represented could not afford, in their poverty, to give him the slightest assistance. Having supported the dignities of his station in a manner that may be best described as “ anyhow,” Gottbebes- in 1867 agreed with Messrs. Bischofpsheim: and Goldschmidt, for the issue of a loan of £1,000,000, to be devoted to the construction of railways. Unlihe the difficulty which existed with regard to the last New Zealand loan, there does not seem to have been the smallest obstacle to getting a quotation for this Honduras loan on the Stock Exchange, although a little enquiry would have shown that the borrower was hopelessly bankrupt. However, the quotation did not obtain the desired result, for in six months after the issue of the loan only £48,340 had been- taken up by the public, and the rest ‘of the stock reverted to the representatives of the Honduras Government. An interest of 121 r per cent, had been promised to investor's, but had failed to secure them underthe auspices of Messrs. Bischoppsheim and Goldschmidt. Fortunately for the borrowers, a deus ex machina appeared at this time in the shape of one Mr. Chaeles Lepevee, who undertook to place the loan. By a series of judicious operations on the Stock Exchange the loan was forced up to 94, arid then the very people who had declined to come in at 80, and at a much lower figure, rushed in to buy. The popular enthusiasm was increased by ‘ the recommendations of brokers, who had bought from Mr. Lepeveb. greatly below the market price, and who were naturally anxious to give their clients the benefit of so valuable an investment at the current quotation. Mr. Lepevee got rid of his whole purchase within fifteen months at a heavy profit, and everyone benefited except the genuine buyer. For his services in the affair, besides his actual profits on the sale Mr.. Lepevee got most advantageous terms in the way of commission and the like, and the whole matter having turned out so pleasant for both, principal and agent (the one of whom wanted money and would pay any price for it, and the other of whom did not care who suffered so long as he profited), that in 1870 a loan fox £2,000,000 was effected, with even larger profits for Mr. Lepevee. The accounts show that, apart from any gains by gambling in the stock, Mr. Lepevee pocketed nearly £1,000,000 for himself or his associates. The trustees for the bondholders were among the few reapers in this abundant harvest. Two of them ‘ 1 received £4500 each for four- “ teen months’ service.” This generosity to the representatives of the bondholders is perhaps explained by the fact that they were usually clerks either of Messrs. Bischofpsheim and Goldschmidt or of Mr. Sharp, Messrs. Bischofpsheim: and Goldschmidt’s solicitor, and that, as the committee’s report said, they “seem to “ have implicity obeyed the directions of “Don Carlos Gtjtieeres, and in pur- “ suanoo of such directions to have “dealt with the funds and bonds u of the loan without regard to the “ terms of the trust deeds.” The Honduras loan, the main facts connected with which have been here related, was in its way “the biggest swindle” exposed by the committee. The three other loans were the San Domingo, the Costa Rica, and the Paraguay. In the first of these cases, the agent, a Mr. Hartmond, admitted, with refreshing frankness, under examination, that almost the whole proceeds of the loa n were by him put into his private business. The Costa Rica loan showed a reckless disregard of public interests and honesty by the committee of the Stock Exchange. It was a second loan for that State, and amounted to £2,400,000 ; and though the committee were notified that Costa Rica was absolutely in default for the first loan, they, under the influence of the syndicate interested in placing the loan, granted Baron Eulanger’s agents a settlement and quotation. In the Paraguay loan, Mr. Samuel Laino and Mr. Albert Grant had what are known as

“ the big licks,” acting much in the manner that Mr, Charles Lefbvre did for the Honduras loan. During five months that they held stock it was quoted at a premium, but after they had taken advantage of the market to sell out, it foil so low that in July, 1875, the' £IOO bond could bo bought for £l2. All the names of the financiers mentioned in connection with

these loans, have, or have had, a certain position in the greatest money market in the world, in the chief business centre of the globe, and yet, as the report of the committee says, these persons have introduced loans to the public “regardless of “ the financial resources of the borrowing “ State have deliberately broken the pledges under which the loans were raised, namely, that “the proceeds were to “ be spent on works Calculated to develop “ the industrial resources of the borrowing “ country;” and with regard to the public who lent the money, ‘ ‘ have obtained “ their money and then betrayed their “ interests.” After the disclosure of the doings of the London Stock Exchange, the less we hear in New Zealand of the deplorable consequences likely to ensue from Sir Julius Vogel’s independent action in England the better.