NEGOTIATION OF THE £3,500,000 LOAN.

New Zealand Times, Volume XXXIII, Issue 5423, 14 August 1878, Page 2

NEGOTIATION OF THE £3,500,000 LOAN.

The following papers, relative to the above subject, have been presented to both Houses of the General Assembly by command of his Excellency : The Loan Agents to the Hon. the Colonial, Treasurer. London, Juno 7, 1878. Sir, —We are glad to bo able to confirm telegrams which we have already sent to the Hon. the Premier, by which you will have learnt that the two loans, amounting in all to three and a halt millions, have been negotiated with entire success. The Bank of England, on our behalf, called for tenders. The list was opened on Monday morning, the 3rd instant, and closed on the following morning, when the applications received amounted in the aggregate to about eight and three-quarter millions. The great success with which the loan met was duo to a variety of circumstances. The time chosen was particularly opportune ; the bank rate had just fallen to -1 per cent. We had selected for receiving subscriptions the day upon which the various rumors in reference to the Congress were confirmed by the announcement that it would positively be held. The buoyancy of the market during the previous week culminated on the gratifying intelligence that all doubts as to the Congress being held were at an end. The low rate of money was another circumstance in our favor, and the tact that the Bank of England, for the first time in its history, had called for tenders for a colonial loan, was not without its influence upon investors. It is important that you should recognise that the success of the loan does not mean that the market is open to the negotiation for some time to come of further New Zealand loans. Too much stress should not be attached to the magnitude of the subscriptions. It is not to bo supposed that there was really a willingness to subscribe to the amount of eight and three-quarter millions. When It became known that the applications for the loan would exceed the three and a half millions we had to dispose of, it became evident that the full amount applied for in each case could not be granted ; hence applications were put in for much larger suras than the subscribers actually required. We had for a long while been engaged in negotiations, in order to be ready immediately on a favorable opportunity presenting itself. The opinions wo received from most experienced persons to whom wo applied were that wo could not hope to place so large an amount without submitting to a considerable discount on par rates. Even when we adopted the plan which seemed to us most desirable—of enlisting the assistance of the Bank of England—we wore not assured of success; and when we finally fixed the rate, we resolved on terms of payment loss favorable to the subscribers than any authority was prepared to recommend us. After anxious consideration, wo determined on adopting a fixed rate, as wo desired to bo assured in advan-e of at least a major portion of the loan being subscribed, and we could not count on such au assurance without those who wore willing to subscribe largely being able to know the rate at which the loan might be obtained. Hourly, from the time the advertisement was issued, the position improved ; but we are quite confident that, in view of the large interests at stake, we adopted all the precautions that could have been devised to obtain a good rate for the loan, coupled with a reasonable assurance against failure. The allowances for payment under discount amount to a mere fraction, and the price may therefore bo considered equal to par. The commission we agreed to pay the Bank of England was only J per cent., a smaller commission than weuld have been required far the same services from much less powerful negotiating bodies or firms. Although not mentioned in the advertisement, wo gave currency to tho assurance we were authorised to make, —That the Government would not offer any further loan in this market earlier at least than September, 1879. —Wo have, &0., P. G. Jolt an, W. J. M. Larnaon, Julius Vogel, Tho Hon. the Colonial Treasurer, • Wellington.