The Wairarapa Daily. WEDNESDAY, SEPTEMBER 23, 1885. FINANCIAL MILKSOPS.

Wairarapa Daily Times, Volume VII, Issue 2102, 23 September 1885, Page 2

The Wairarapa Daily. WEDNESDAY, SEPTEMBER 23, 1885. FINANCIAL MILKSOPS.

The delegates who were sent Home to promote the East and West Coast and Nelson railway have returned, and one of them, Mr A. D, Dobson, has given a long account of their experiences to the Canterbury Press. A more amusing article it would he difficult to find. After relating how they came into contact with Mr j. E, Meiggs, who is described as a most honorable man. and a man of high standing in financial circlesin England, Mr Dobson proceeds to say that, after looking around, in the course of the next few weeks" the delegates learnt a great deal concerning the methods adopted by the magnates of British finance iu dealing with proposals to execute foreign public works, The proposer was first of all to get a contractor who will undertake to do the work for a given sum, It does not follow that the contractor is himself possessed of the whole sum required for the work, But he enjoys the confidence of leading financiers, who, without examining th,e merits of the proposed scheme, will, on his recommendation that it is a good thing, back' hitn up with their names and credit, The financiers are the underwriters, but the proposer, even when he has got down to their stratum, has not yet touched the spring of the golden stream he requires, The underwriters merely engago to find capitalists who will produce the money, either from their own pockets, or from those of their friends whom they can influence. But here, said Mr Dobson, comes in the source of one of the main charges on the whole affair, viz,, the price at which the loan will be floated. A nominal £IOO of the Foreign Public Work scrip in question may be worth, in the estimation of these capitalists and their friends, only £95 or £9O, or perhaps less. Hence the underwriters must make a charge on tho proposal, to cover not only their own profit, but the probable amount belew par at

which the loan will be floated. This charge is the expenses of underwriting which figured iiithe proposals eventually submitted by the delegates," Any man possessed of common sense would have thought that the promoters of such an extensive and expensive a work as tlie East and West Coast railway, would have selected delegates who Lad little or nothing to learn when they got Home. But experience seems to have been of no importance in the eyes of the good people of Canterbury and Nelson, so they simply pitched upon the men who were the greatest enthusiasts in the matter. When'the remarkable trio got Home, they were immediately taken in hand by members of contractors' rings, and shown everything that was desirable from one point of view, without being allowed to have even a glimpse of the other. The extent of their ignorance is simply, yet beautifully, illustrated by their explanation that the contractors had to charge for underwriting. It is just possible that they got a little confused in terms, and that, if Mr Meiggs had used the word " sureties" in place of " underwriters," they would havo remembered that the New Zealand Government requires a contractor to find security even if he merely undertakes the manufacture of a shovel. But to parade the expense of a bond of of this kind is surely the very height of* absurdity, A business man makes his calculations, and includes the expense of whatever security lie would have to find, and then submits his terms. Mr Meiggs, however, found nothing but sucklings in the New Zealandeia, and therefore boldly proposed that the Colony should do its own underwriting to the very stiff tune of ten per cent; and the delegates were so ignorant of the usual practices as to approve of the offer. How the head of the house of Meiggs smiled is not put on record, but ho evidently had a hook, or perhaps a sleeve, to which he could confide bis mirth, otherwise the unsophisticated delegates would have come back and reported not only that all the people spoke well of him, but also that he was in the habit of laughing at apparent trifles. Parliament, by a very narrow majority, steered clear of the shoals 011 which the delegates, through theii lack of acquaintance with the merest outlines of contracts, would have landed the colony, and the delegates may now reflect at leisure upon how much they learnt during their trip. They are, of course, in total ignorance as to how much they may vet learn.