Malbourne after the Carnival.

Poverty Bay Standard, Volume XI, Issue 1263, 31 January 1883, Page 2

Malbourne after the Carnival.

(FROM A VOLUXTABY CONTRIBUTOR). [The following was unavoidably abut out of our last evening’s issue :— MELBOURNE, January IS. Which they have nominally advanced.” This ' nominally advanced ’ sum, by the banks to the Government, of £2,000,000, and on which the former pay interest, ad interim, is one of the many peculiar transactions connected with the financial operations of the present Ministry, for it is an article of agreement that the Government absolutely cannot touch the money until the loan is floated though its bills are now falling due, on ac> count of it in London, and which must be provided for in some way, let the cost bo whet it may, and whether the whole loan is floated or not. There seems to be but one opinion here, and that is a general censure of the Government for giving way to outside influences, and shelving the loan during a year conspicuously remarkable for plethora In the English money market; for placing it at a time when money is dearer; and of fixing the minimum at par—a price held by those most interested, as leaving no, or insufficient margin for (their) profit. That such is the case the result proves ; but that the terms offered for your New Zealand million lonu—£»a IGs have militated against the Victorian four million, is hard to believe, Thera is plenty of money waiting investment amongst English Capitalists to satisfy both these loans, if the inducements BN equally satisfactory. But soma excuse is better than none, and to the credit ot the Victorian Treasurer be it said, he doos not acquiesce in that opinion. Others say that the credit of the Colony will materially suffer, as the present failure, such m it is, will be ascribed to a feeling at Home that Victoria, in common with other Australian Colonies, has morfaaffed her future to an imprudent extent. Such is the purport of a telegram received here from London, on the 10th instant, and which you have, doubtless, had transmitted. The Colonies, in fact, have mortgaged nothing, so long as they expend their loans on reproductive works, and other collateral means by which their w enue may be increased, and their resources developed. It is absurd to say that the credit of either Victoria and Now Zealand has been imperilled, when the published fact as to the outcome of a year of almost unexampled prosperity—largely to uphold it—are considered. The question, in my mind, is one purely of finanee—ordinary business, fn fact, and one in which the extraneous considerations of too much indebtedness and overrunning the constable, do not enter. The tenders for that portion of the loan presently taken up, is proof of this. The “ small fry ” Investors generally think for themselves, in matters of this kind ; and the fact of some of them, acting independently of the broken, having offend 50s per cent in advance of the minimum fixed by the Government amply demonstrates that the English Stock Exchange, and Its “ bears ” as causing the present delay in the hope of ulterior profit. But the position of the Victorian Government is an unenviable —not to say humiliating, one. After playing at Parliamentary “ ducks and drakes ” so long, it is apparently forced to the alternative of either reducing the minimum, keeping the loan en the market, at its present price, or withdrawing it altogether. The acceptance of either will be disastrous, and it may be averted, as before the 15th a more appreciable amount may be tendered for. Sir Bryan O’Loghlin is confident that this will be so; but without some specific modification of terms, I fancy the wish is father to the thought. This is the first loan Victoria has attempted to negotiate without the intervention of the broken as middlemen ; and they naturally feel sore at being put on one side, and so placed at a disadventage. In looking up this matter, I find that the 1879, three million loan, 4J per eeo, letched £96160 24d, the bonds of which the bioken parted freely with at from £lO2 10s to £lO3. The two million low, 1880 (balance) brought £lO2 5s lid, a large proportion of which they quitted at prices ranging up to, and over £lO7, price. Consequently, they, finding ”e Government desirous of saving this profit to themselves, have amalgamated their forces to thwart its design. The existing difficulty must, however, be got rid of, even by that species! of necessity known as “ hook and by crook,” for, in October of this year, a further loan of £3,800,000 mutt be floated to redeem the six per cent, debentures then falling due. Whether a knowledge of these co-existing facts have operated unfavorably I have not hea d suggested, but they are facts, the exact consequence of which may not be at once apparent. Referring to my opening remarks, re the business depression, the excitement of the moment is great, for, not only do merchants and others find the restoration of activity somewhat tardy, but the solatium of expectancy is somewhat blurred in contemplating the blow temporarily given to commercial circles, should the Government be forced to make necessitous arrangements with the Banks here. Already it is reported in the commercial columns of the “ Age,” that “a

■My eeaaiderable amount ef bualMM has tern brai(Mto»ttaMbUU, tad wearoUksly to hwe • warn Um a better state of affairs 11 th* mousy market for the immediate titan |" whfle current telegrams report a further rise in the outside market rates of discount Whatever the fault, and whoso ever it is, that the four million loan is a temporary failure, it fa a point on which the Metropolitan, and most of the provincial press are agreed, via., that the Government an, more or less, to blame. The ** Age” particularly 1 —an ultra Berryito organ—fa almost jubilant v over the disaster, for it is one of those re- ' markably acrid journals whose enemies can do nothing right, nor its friends anything wrong. When it fa tired of hammering the Government, it assails its opponents, and wean a subject to tatters, n-nashing it for the matutinal meal, with a persistency that would ba remarkable in any other cause. I quite agree with the " Age" that the placing of the New Zealand loan in the market, at the same time, and at a lees price, has " aa much to do with our mishap, aa the repudfa. tian by the State of Tennessee, of any liability for its Treasurer’s defalcations." But I dispute its assertion that 11 the debentures of New Zealand have always sold lower than ours." The implication, o’ course, is that the New Zealand stock, being loss marketable as an investment, fa not feadersd for (that being synonymous with selling stock securities) so nigh as the Victorian. I give your Colonial financiers greater credit for a knowledge of the subject of economic money borrowing, than I can such men as compose the present Victorian Ministry, with Bfr Bryan O’Loghlen at its head, and the Hon. Thomas Bent as a railway co-sd-jutor, whose misrepresentations, as to the Immediate necessity for the four million loan, have largely contributed to the present fiasco. If the New Zealand debentures fetch a lower price, at times, it fa not, as the "Age” implies, because the English capitalist holds them in lighter estimation, but because they are offered, with greater sagacity, at a pdce which the borrowers think the lenders will be willing to give. And herein I incline to the belief that the very proper and laudable desire of this Government, to save the profits which usually go into others' pockets for its own Treasury, has led it into an opposite error of fixing the minimum too high. It has—" The fault of the Dutch, it questions little, while it asks too much.” . . The Treasurer explains that the minimum of £IOO does not indicate the actual price of the loan. Certain charges amounting to £2 3s. Id. per cent have to be defrayed out of the loan, which if floated at par will thus, in fact, only represent £97 16s. lid. to the State. These charges consist of £1 os. per cent, cost of managing the stock during the 25 yean of its currency, £55,000; commutation of the English stamp duty, 7s. 6d. per cent, £15,000 ; accrued interest, Ils. 7d. per cent, £23,200; total charges, £93,200. But Sir Bryan O’Loghlen forgets—perhaps his want of sagacity did not cause him to re* member—that, according to the prevailing opinion, had he looked less confidently on his own stock, and more generously on hfa neighbour's, and placed it at about £9B, the probability fa that he would have had the satisfaction of having the full price of £IOO offered, which would have landed him in a f better financial and less humiliating position before the world ; whereas now he fa regarded aa a most incompetent financier. The fact of some of the tenders being 50s. above gag (the Treasurer’s minimum) fa proof of