The Consolidation of Loans.

Te Aroha News, Volume II, Issue 93, 14 March 1885, Page 3

The Consolidation of Loans.

The consolidated 5 per cent, stock of 1567, which it is proposed to convert, amounts to £4,660,000, due in about 1904. The sink ing fund is 1 per cent., which by the 'egis lation of last session is no longer to be paid out of the revenue, but to be met by debentures put to the Sinking Fund Account instead. The accumulated sinking fund on this loan is about • 275,000, and the object of the new arrangement is apparently ta get possession of that money. To do this the holders of present stock, who ate liable to be paid off by the annual drawings at any time at par, are invited to exchange their stock for debentures at 5 per cent., having seven years' currency guaranteed, and to be exchanged at the end of the seven yerirs for three per cent (?) stock, running for fifty years certain, and of wh'ch they will get £107 for every £100 debentures now to be issued. The seven years' security against being paid off 1 , with the ppeculation upon a probable fall in the rate of interest for colonial loans seven years hence, has apparently made the conversion in England popular. Admitting that the stock be three per cent which requires confirmation, the net result to the col ny would be an addition to the debt of £326 000. with a saving of interest of about £S0 000 a year, adding the £275,000 absorbed sinking fund this operation will increase the debt of the colony by £6ol. OOO.Thereisanother question besides that of finance involved in this transaction How far is it right for a Government to raise money in this way — to exhaust, in fact, the last resources of the colony's credit — merely to make good defi ienoies in revenue, or to enable them to reduce the Property Tax ? • hese are the purposes to which this further new loan — for such it practically will be— were appropriated last session We hold this to be wrong De fioiencies should be met by reduction of expenditire, and the Property Tax ought not be reduced without a corresponding reduction in the taxes which fall on the more needy classes.