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LETTERS FOR THE TIMES., Ashburton Guardian, Volume 1, Issue 159, 30 September 1880
LETTERS FOR THE TIMES.
No. 7. To the Editor. Sir,— The manner in which this colony has been looted by the political army whose rearguard now holds possession of its citadel —but only for a short season, I trust—is something astonishing. Whichever way we turn we find that the Governmental machinery has been used for the enrichment of individuals, and casting our eyes around we see “big bugs” walking off with their sacks of plunder in all directions, while others would be only too glad to follow suit if they could get their spoil together. If it be said that this is strong, and even coarse, language, 1 reply that steady-going colonists, who find the country laden with debt and themselves and their families with taxation for the benefit of ruthless speculators, may be excused for venting their feelings in language suitable to the occasion. It is the sole consolation left to them. When we consider the manifold resources of New Zealand, its natural capacity for supporting many millions of inhabitants, how it started upon its career free and unencumbered, it is lamentable to think that, in the fourth decade of its existence, it should be sadly struggling in the waters of adversity, and furnishinga theme for count less homilies by friends and neighbors upon the hitter fruits of financial profligacy. Its people have but themselves to blame. If they will entrust the administration of their affairs to ignorant, reckless, or unprincipled men, they ought not to complain when the natural consequences ensue. The choice of representaii /33 in the Assembly, as well as for the minor public bodies, which is often made by the constituencies, is strange indeed. If at an election two candidates are standing—one a man of education and integrity ; the other, some pushing, selfseeking, bullet-headed individual, who chatters away like a poll-parrot, and knows as much about politics as that intelligent bird, the odds are two to one that the latter gets elected. There are numbers of people who take offensive presumption such as that described as a proof of talent, instead of being, as it commonly is, the sign of an inferior mind. But so the world wags, and I suppose it always wil so wag until the end of time.
If the final results of our loan transactions are proving unpleasant to the colony, certain persons are nevertheless entitled to say—‘ ‘ It’s an ill wind that blows nobody good.” The twenty millions which we have borrowed in eight years have furnished, pretty pickings to some folks. The spendthrift who supports himself by “flying kites” soon learns the meaning of the word “ commission”, as well as that of “discount.” He gives a bill for LIOO, plus interest, from which the money-lender knocks off L 25 for discount, and then casually observes that it is usual to allow 5 per cent, commission on such transactions, which he accordingly appropriates, and hands Charles Surface seventy pounds in lieu of the hundred. It is, I suspect, not generally known that the colony undergoes a similar squeezing process whenever a new loan is floated. A heavy discount —getting heavier every time—is duly exacted, and the first blood thus being drawn, a posse of bankers, loan agents, and brokers rush in for their little morsels, while the ambassador extraordinary from the colony hovers paternally over all, conscious that his patriotic services are sure of recognition by the General Assembly in due course in the shape of a handsome present of hard cash, whose real nature will be pleasantly glozed over by some fine-sounding name, so as to make the colony look like the debtor instead of the creditor. Perhaps the biggest thing we have ever given in the way of “ commissions” was that presented to the Rothschilds in 1875, when Mr. Yogel, having first judiciously and confidentially informed the Rothschilds that the colony was “in a mess” (as no doubt it was, for Mr. Vogel and his colleagues had spent the whole four millions before it was borrowed), proceeded to.
bargain with those experienced financiers as to the terms on which they would condescend to smile upon the efforts of the colony to raise four millions of money. Those terms were LBO,OOO cash, and the Rothschilds got it. Think of that juicy morsel, ye New Zealand commission agents, and let your mouths water freely ! However, the Messrs. Rothschild are not the only lucky people in connection with New Zealand loan-mongering. There is a mysterious firm of brokers on the Stock Exchange by the name of Scrimgeour— Messrs. J. and A. Scrimgeour— whose advice seems indispensable to the success of our kite-flying ; and they by no means give advice gratis. On the occasion of the floating of the three and a-half million loan in 1878 they were paid by us L 8,750, for “ general services rendered as brokers up to the time of obtaining official quotation of the loan,” and as, deeming the loan a good investment, they applied for a.substantial portion of it, they were allowed a further commission of a quarter per cent, upon the amount of their application ; so that altogether they made out of the colony L 11,349. They did not do so well on the last occasion. There were such a lot of persons to divide the commission, while the Bank of England stood inlhe midst like a lion amongst the jackals, that really the share left for the consulting brokers was infinitesimal. Messrs. J. and A. Scrimgeour were only paid L 1,500 “ for services rendered in advising and assisting in matters connected with the loan and its quotation on the Stock Exchange.” The Bank of England decidedly came off best in the distribution of the commission on the floating of this five million loan. It was paid by the colony a solid sum of L 25,000 for its patronage ; and then, in order to grease the wheels, and of its own motion, ■apparently, the Bank allotted L 11,871 to sundry brokers for commission for what they did, and this further sum had to be paid, not by the Bank, as one might have imagined, but by the colony. Then the Crown Agents got L 6,250 for their commission, and Sir J. P. Julyan L 6,250 for his, while the colony instead of the bondholders, had to pay L 4,800 for stamp duty upon the converted bonds ; and there were sundry odds and ends, so that altogether New Zealand was bled to the. extent of L 56,294. The solitary man left out in the cold was Sir Julius Yogel, who was forced to be content with his salary as Agent-General and the delightful feeling of having served what was once his country, although, at the same time, if he has failed to get his fingers into the pie, it has not been for want of trying. The discount paid by the colony, in addition to these commissions, was such as to make one wince. We borrowed nominally’ five millions ; in reality we shall have to pay the bondholders six millions, besides compound interest upon the difference for a long series of years. “ Inscription of stock ” is a phrase of grand and mysterious sound, and as scarcely anybody knows what it means, the public have been led to believe that it is some newly discovered panacea for our financial ills —omne ignotum pro magnifico. It is actually an old scheme, which was put into operation years ago by the Metropolitan Board of Works and the Canadian Government, while other governing bodies have rejected it. It was advocated by Mr. Westgarth, in his well-known financial circular, a long time before Sir Julius Yogel took it up ; but, then, Mr. Westgarth was advocating it in the interests of the bondholders, and not of the colony. That is just the point of the whole thing. One can see how the bondholders will benefit by the change. It is equally plain that the transaction will be profitable to the Bank of England, which will receive from the colonyseveral thousands a year for doing a little clerical work ; even the Imperial Government will have no cause to grumble, since the luckless colony will be required to pay it heavy stamp duties ; and as to Sir Julius Yogel and the two other loan agents, whom it is proposed to place on a salary hot exceeding L 2,000 a year a-piece for presiding over the conversion, they at all events will have cause to rejoice at the operation should it ever come about. The advantages to the colony are, however, mere paper advantages, which may or may not prove to bear a money value, and we can see by the case of the five-million loan that the money balance may, so far as the colony is concerned, shew itself on the wrong side of the ledger. Is it not time that a new order of things was begun?—Yours, &c., G. W. Purnell. Ashburton, 26th Sept. 1880.
LETTERS FOR THE TIMES., Ashburton Guardian, Volume 1, Issue 159, 30 September 1880
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