THE PRIME MINISTER IN TROUBLE.

Dominion, Volume 4, Issue 1037, 28 January 1911, Page 4

THE PRIME MINISTER IN TROUBLE.

We understand that none of our contemporaries have published anything like a detailed report of the Prime Minister's endeavour,, in his Stratford speech, to Bolster up his injudicious statement in the South that tho critics of the five-million loan, were talking "absolute rubbish," and that "nearly every financial journal of consequence in England liad referred to it as • a satisfactory transaction." This portion of his speech is given in another part, of this issue, and we do not grudge tho space it occupies, since Sir Joseph is generally the best witness against himself. Had'he, from the first, frankly admitted that circumstances required the raising of the loan in November, and that the result was, owing to circumstances of various kinds, really extremely unfavourable compared with the average result of past New Zealand issues, there would have been no controversy.. It is entirely his own fault 'that he'has placed himself at his'pre- ■ sent disadvantage through his inability to perceive that it may sometimes be good, policy, for a Prime Minister who treats' politics'as a sort of national poker game, to vary his general rule of noisy boasting bluff. We placed on record tho joint opinion of the very best journals in. London, where financial criticism is concerned, that the loan was a.fiasco. This fact was so plain that it was impossible for any reliable ' 'Writer not to. see and admit., it, and. there is nothing remarkable therefore in the agreement of the London Times, the Financial Times, the Morning Fast, the Financial Review of , Reviews, the Westminster Gazette, the Manchester ' Guardian, _ tie Daily News, the Financial World; and ' the Birmingham . Daily Post' that-, the loan was a failure. ' But, of course, this fact is independently established by the reception given to the loan by the investing public—they applied for less than 7 per cent of it. In giving the opinions of these papers we .gave, their statements as to tho. reasons for. tho. failure, and of .course ,nobody, anywhere, here or in' London,, sug-i gested that the fiasco was duo to any distrust of the country's stability.

Tho point at issue was the success or failure of the loan. The Prime Minister' has industriously hunted through the second-rate, third-rate, and tenth-rate papers, outside our list in search of help. He finds p'lonty of evidence in them that nobody thinks the country is bankrupt or likely, to repudiate: he could have found just as much evidence of the same kind in the extracts from the firsfrrato journals that we quoted in these columns. 'But he cduld>not find even" then- : anybody to • support his' foolish assertion that, the loan had been a great success. His best witness is the Financial News* -that. faithful friend of colonial boomsters. which is ■ owned by the notorious "Harry" Marks, the man who was shown to have accepted fees for sup-, porting in his'pamper worthless promotions and who has'never dared to take, action, against the repeated declarations of the Sjmctator respecting his character and his unfitness for public office.. Even'this paper, however, has to admit that the loan was a "set-back." Tho Prime Min-. ibter thinks to offset his failure to bring a singlo -piece of evidence against our proof that he made a statement absolutely and directly— ; we hope not. wilfully—contrary to fact by quoting newspapers to prove something that nobody has ever de-, nied. Nothing could have been more unfortunate than his reference .to the Coylon and Indian loans in the early part of last year.. /The Ceylon loan, which had the worse reception of the two, was for 3i per cent at the same as the New Zealand loan of that time (the £1,850,000 loan)— and tho public tcok 10 per cent of it. The recent big loan was a;3ipor cent loan at 98j, with.all kinds of desperate bargain additions thrown in, and the public took only 6i per cent of it before the lists closed. As to the Straits .Settlements loan, the Prime Minister was careful to suppress all the material facts. In the first place it was not a debenture issue. There were ho wild •offers of interest bonuses, no 4i per cent premiums on conversion. It was a plain issue of inscribed stock at 951, and it received as good a reception as tho New Zealand loan. Now, the investor who took up a New Zealand debenture at 98i with the object of converting it was presented with a bonus of at least lj in interest, so that, with 1 per cent for the underwriter, the debenture realised not more than 96j. For this stock amounting to £102 would be issued on conversion, which means that our issue was equivalent, .from New Zealand's point of view; to an issue of inscribed stock ' at about £95, or less than tho Straits Settlements price. In point of fact, the market quotations of our existing 3i per. cents, £55 7s, 6d. at one stage, showed what tho issue was in terms of - a straight-out issue of inscribed stock. The Prime Minister knows all this, but it is his way to mislead tho public. Ho knows that a strict measurement placed our credit, so far as that loan was concerned, below that of a Crown colony. His case is indeed'desperate when he. has to compare this Dominion, which he. always speaks of as above comparison with even gilt-edged nations, with an insignificant Crown colony.of no repute; and especially . when, tho comparison being truly made, the Crown colony comes out on top. As a professing patriot, Sir Joseph ought to have spared his country such a double humiliation. He ended his reference.to the matter with a retreat to what he doubtless thinks is safer ground by pointing to the purposes for which the loan was .raised. His critics, ho "might rightly be asked what portion of the loan should be omitted,"- We shall

tell him—all of it save the £1,250,000 for the Dreadnought. Wc shall tell him also where he would obtain the money wanted for the other purposes, observing first that there was no occasion for an addition for these purposes to the £1,850,000 raised by him some seven months earlier. Let him consider the fact that the mere Departmental expenditure in Mr. Seddon's last year stood at the high figure of £4,252,233, and that in subsequent years it has been:

£ 190G-7 .' 4,730,800 1907-8 5,085,344 1908-9 5,575,483 10'09-10 .........-.........:.. 5,476,513 1910 : 11 (est.) ............ 5,750,000 [The last line is. a conservative estimate ■ based on nine months' figures.] If ho had not increased the cost of the Departments above the high figure reached by Mr. Seddon, he would bave had in hand no less a sum than £5,362,981. Had he not wasted the greater part of this vast sum of money,.he would not have had to raise the big loan at all. His doctrine that the. wild borrowing policy must" continue unabated is thus shown to be in reality the doctrine that he must have the utmost liberty to waste the increasing sums that he extracts from the taxpayer.