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The following is the 'Financial News's' (April 1) criticism of Harbor Boards' finance, to which reference was made in a recent cablegram : Last year New Zealand securities all had their turn under the Caudine Forks. The Bank of New Zealand crisis was succeeded by a spasm in harbor bonds. These are securities which should never have been admitted into this market at all; but now that we have them, we must be prepared for some trouble with them, if not worse. They were manufactured for British consumption by the New Zealand banks, most of which had a hand in them, and, no doubt, are bitterly regretting the facility with which they were able to launch them. No less than ten or eleven issues have found their way into the official list, and others have a surreptitious currency. They all transgress, more or less, the first principle of safe investment—full and regular publication of accounts. Even when they have been publicly issued here by semi-official representatives of the colony, very little definite information can be got regarding them. In several cases we have made personal inquiry for the latest issued reports, and have met only with apologies or disclaimers of responsibility. That is a peculiar line to take for, any negotiator of a foreign or colonial low on this market; nevertheless certain New Zealand banks are not ashamed to do it. In one case we were triumphantly referred to the advertised notice of last coupon payment sufficient answer to all scepticism or ciifciciism. So long as the bondholders get their interest they are to ask no questions. It is, apparently, no concern of theirs whether the coupon money has been actually earned or only borrowed. In the latter case the power of borrowing may suddenly come to an end, and then, no doubt, they will get full information—in bankruptcy; but till then they are only to open their moutliß and shut their eyes, trusting imSlicitly to the " great recuperative power of Tew Zealand," which is the last hope of Maori finance. Failing any satisfactory discovery at the issuing banks, we have searched the official records of the colony for a glimpse of light on these mysterious harbor bonds. Though a few casual references to them have been found, they labor under the drawback of being, with one exception, nearly two years old. The exception is interesting and important, being the report of a debate on harbor trusts which took place in the New Zealand House of. Representatives last August. It is lively enough reading, though not very explicit as to figures. For a tangible modicum of these we have to go back to the official statistics of the colony for the year 1886. Embedded in them is a tabular statement exhibiting the income anil exptfiiditure-oi-ihe harbor boards in that year, and their financial condition—atthe end of it. There are twenty-one harbors, and the total revenue they derived from wharfage dues, rents, tolls, etc., was L 191.397, or at the rate of fully L 9.000 a year each. Their receipts from other sources were L 38,728, and from Government grants L 28.357, making a gross income from all sources of L 258.483. Their expenditure was in such striking contrast to their revenue that to do it justice we must reproduce the details : Publio Works and Maintenance .. L 402.555 Pilot and Harbor Mastet's Department 29,811 Office Expenses .. .. .. 12,884 Other Expenditure .. .. .. 191,412 £688,142 An outlay of L 638.142 in earning L 258.483 has not a very healthy appearance. If these figures be correct, the harbor authorities must be running behind to the tune of nearly L 400.000 a year. Even for New Zealand that is rather free-handed, and excites some curiosity as to how it can De done. A partial explanation is found in a column headed " Receipts not Revenue. ,f These are credited with £654,386, but whatever their secret may be it is well kept. Figures, it fua been said, are very misleading, but they can also be very discreet. Here they tell no tales, and the reader has to guess where tho L 654,386 of " receipts not revenue " came from. Part of it may have been from quarters which will not expect repayment; but there is reasonable ground to suspect that the bulk of it was borrowed money. At all events, another column in the table informs us that the twenty-one harbor boards have taken on themselves debts to the nice amount of L 2,887,700. A footnote cautions us against the optimist error of assuming- that to be their whole indebtedness. It does not, we are told, take any note of bank overdrafts. Without the overdrafts, however, it is well enough. Wild prodigality characterises the whole business; but some cases are worse than others. Only a single harbor in the one-and-twenty earned the cost of its maintenance, to say nothing of interest, on the three millions of debt. It was Wellington, which, with an income of L 36.907, spent on maintenance L 27.890. Pilotage, harbormaster's department, and office expenses absorbed fully 14,000; and as much more remained for interest and sinking fund, which would be at least LIO.OOO. Wellington makes the best show of solvency, though it is evidently outrunning the constable too. It is much more difficult to discover how Otago contrived to make both ends meet on the basis of these official figures. It Bpent in works and maintenance L 58.872, on pilotage and harbor-mastering L 7.009, office L 1,466, and "other expenses" (including, presumably, interest and sinking fund) L 39,987. Under these heads it disbursed a grand total of L.107,000, which had 1 to be taken out of an income of less than half as much—namely, wharfage dues, rente, tolls, etc., L 39,571 ; other sources, LI 1,031; total, L 50,602. In '•'■ receipts not revenue," Otago had a handsome windfall of L 150,000; but whether a gift from the gods or only a new loan is not hinted at in the most distant way. Mr J. L. Gillies, the secretary and treasurer of the Otago Harbor Board, wrote lately to a contemporary protesting against libellous insinuations as to its financial condition. He took up a great deal of space in trjing to prove that the revenue of the Board was increasing, and that, instead of being in difficulties, it had money at its credit; but, with the strange perversity of all' New Zealand harbor financiers, he furnished no accounts. So persist is their silence on that point that we shall have to begin to doubt if they keep accounts at all. Since his letter appeared we have made further inquiry at the London agents of the Board, with the same negative result' as before. These same agents—viz,, the' Colonial Bank of New . Zealand—though they have not received from the Board proper accounts for several years past, have the coolness to issue a number of random statements and memoranda, which they exj pect to completely reassure the bondholders. One is the diffuse and indefinite epistle of Mr Gillies to the ' Economist'; another is a memorandum which Mr Gillies prepared last July for the Finance Committee, acknowledging a deficiency of L 3.000 in the revenue for the current half-year; and the third is still Mr Gillies this time as an apologist to the merchants of Dunedin for an unavoidable increase of the harbor dues. Whatever else is wrong with the Harbor Board, its secretary and treasurer cannot be charged with inactivity. But why his rooted objection to publishing official accounts, whioh would save him afi the trouble of his elaborate explanations,

and might be much more intelligible to the bondholders ? , But all the one-and-twenty borrowing harbors of New Zealand are not prodigals. There is one which cultivates Spartan frugality of the severest sort. Wairoa only mends LlB2 per annum on its whole establishment, of which LIBO is for works and maintenance, while the odd L2 has to, cover all other expenses. We might surely expect to find solvency here; but alas! no. The Wairoa Harbor Board, though limiting itself to a couple of pounds a year for administrative expenses, cannot make both ends meet. Why? Because itsivhoh; income is only thirty shillings! Even that, apparently, was a windfall. It did not come from wharfage dues, rents, or tolls, for these did not yield a penny. It was entirely from "other sources "—charitable subscriptions, perhaps, or the grazing on the wharf. When Maoaulay'B NewZealander comes over to stand in the ruins of London Bridge, if he should put on a little too much Barcasm we may take it out of him by asking him " How's Wairoa ?" One other distinction must be credited to Wairoa; it has no debt. Its Belf-denial in abstaining from the hypothecation of so magnificent an income is truly wonderful. Sir Julius Vogel can never have been round that way, or Wairoa would be better known to British bondholders. Overloaded as we are still with New Zealand harbor bonds, it is almost a pity there are not a few Wairoa Sixes among them to give them a comic flavor.

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HARBOR BOARDS' FINANCE., Issue 7918, 28 May 1889

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HARBOR BOARDS' FINANCE. Issue 7918, 28 May 1889

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