Evening post. TUESDAY, MAY 7, 1895

Evening Post, Volume XLIX, Issue 107, 7 May 1895, Page 2

Evening post. TUESDAY, MAY 7, 1895

OUR SINKING FUND AND CONVER. SION. ♦ We hare in round nnmbors .£950,000 of Sinking Fund. Of this amount £367,593 is Sinking Fond under the Imperial Guaranteed loan Aot of 1870. These Sinking Funds are all-attached to loans on whiok the interest is higher than Si per cent. Bnt these loans have not many years to rnn. To convert them will, we bofievo, be disastrous finance. As to converting our 4 per cents., or our 3fc per cents , we may say our main debffia the 4 per oent?. Wo hare over thirty million bearing that interest, and the main portion falls due in 1929. It is not likely tbat the holders are going to take over 3 per cent stocks and give up 4 per oent. stocks with suoh a long currency, except at a prioe that it would not pay ub to convert It is, indeed, againßt the first principles of economio conversion to give debentures at long dates, for you must look forward to ever new conversions as interest falls. The leading French expert, the Editor of the French Economist, Leroy B*aulieu, says that bonds oE perhaps fifteen years only should be given. And our main debt has now thirty-four years to run. If we are to convert, we must give bonds of perhaps forty or fifty or Biity years. And looking at the Bure but gradual decline in interest, it would be a disastrous financial operation to make suoh a conversion. It means swelling our debt. Suppose, for example, we converted -£30,000,000 of 4 per oenti., it is not likely we wonld get the holders to take mnohleißth&n,Bay,&lo,ooo,oooof3peroentg. for them. Our 4 per oents. are at 112, and the holders would not reduoe the interest they are getting, teeing that the loans are of such a long ourrenoy, and if interest is to further fall, and that it must do, it would be a bad finanoiol operation for us even if we could get the oonveraion at even a oheaper

rate. Tin able and sharp money brokers in London are not likely to *llow convorsion unless it is proved aotuarially to tbem that it will pay thorn to convert. We cannot see in this now proposal, thereto™, any salvation to the oolony, or any lightening of our load of interest. If our pa9t conversions bad followed the recommendations of tho Fronoh economist, we might have converted as the loans bccimo das. To convert loans of 31 years' currency would, we repeat, ba violating all canons of sound finance, and can oify bo supported by reckless financiers or by persons interested in getting a bargain at the expense of tho oolony. In tho past there have been disastrous conversions, and one of the dearest was carried out by tho present Government. The release of our Einkingfund that went intothu Public Workß Fund ooßt ns about 4?i per cent. But then it allowed the present Party in office to pose -as non-borrowers. We may just add that we have not referred to onr 3j per cents. They are not redeemable till 1940 ; thoy have therefore a 45 years' cnrrenoy. To convert them on any terms favourable to the colony would be impossible.