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Public appreciation of the statesmanlike policy developed by the recent loan conversion must needs increase on fuller investigation. For its proper understanding a brief retrospect is necessary. In 1878 it was triumphantly announced by Sir Julius Vogel, when making his Financial Statement, that a loan of Three Millions had been floated on the London market at par, bearing 5 per cent, interest. " The result," said Sir Julius, "was an entire success." And so it was then regarded. But notwithstanding the severe crisis through which the Colony has passed, and despite the injurious ~ attacks from which it has suffered, the financial position has gradually and surely improved. There can be no better proof of this than the fact that the same loan, which was considered well placed at 5 per cent., has now been re-floated at 3| per cent., which, reckoned at par, is about equal but rather under 3f per cent. The two loans which have been dealt with consist of a small balance (£388,000) remaining from the 1879 loan, and £2,207,300 of the 1876-77 loan, known as "the 10-40's." The latter is the balance of the three million loan referred to by Sir Julius Vogel in 1878—a portion of which was specially appropriated to the payment of Provincial liabilities. Both sums were bearing 5 per cent, interest, the total amounting to £129,765 per annum. By the conversion that has been effected—that is, by raising a new loan at 3| per cent, to pay off the debentures on the old loan—the interest has been reduced to £94,500, showing a saving of £35,265 per annum. This is not all. The small sum of £388,000 mentioned above was payable in November of the present year. But the balance—namely, the bulk of the loan, was not due until March, 1918 twenty-nine years hence. The saving is, therefore, of equal continuance. But there has to be taken into consideration the difference between the capital value to the colony between the olddebenturesand the new, by which they are replaced. For the old debentures the Colony received £IOO, and for the new it only receives £95105. There is thus an apparent immediate loss on the transaction of £117,000. But the loss is only apparent and immediate, because the total saving in interest during the twenty-nine years which the old loan had to run amounts to £1,044,000, leaving a total net gain to the Colony of £927,000. In roui.d numbers, and, having regard to the accretion of interest on the money saved, the sum of One Milh'on sterling has been gained for the Colony by this bold stroke of the Premier.

This financial operation was rendered possible by the provisions of the Consolidated Stock Act, first introduced by Sir Harry (then Major) Atkinson when Colonial Treasurer in 1876, and which, although opposed, passed through all its stages in the House, only to be thrown out in the Legislative Council. In the following year it was introduced by Sir George Grey, as Premier of the succeeding Ministry, and carried with the hearty co-oper-ation of Major Atkinson, who said " it was a matter of great satisfaction "to him that the honorable gentleman " (Sir George Grey) had at last been " able to see the great value of the Bill " after the very violent attack made " upon him (Major A) when he first proposed it." And it is unquestionable that many grave statesmen at first regarded the Bill with considerable apprehension. For one of its provisions empowers the Governor to authorise the creation and issue of new stock " for the purpose of " raising money for redeeming any out- " standing stock or securities." It was feared that the assumption of this power would tend to destroy confidence in New Zealand securities, because there would be no fixity of possession, and honorable members shuddered at the notion as timid children shudder at a cold bath. But consideration showed them that the proposal was a wise and prudent one. If we borrow at high interest when our credit is low and money is scarce, what public or private immorality is there in borrowing, when our credit is better and money is easier, to pay off our original creditors ? It is •vffc pf the finance of every country in P" **ld tp do this, and New Zealand tne wo. • £ o n ow j n the same course, was slow to , aD( j is still ahead of though she wa* v„ u colodeS( most of the Austraiu and gir Falmam qui meruit, j. us Harry Atkinson is a geneiv Q „ nent. In the course of his speec. . the Consolidated Stock Bill he said : " I feel that I should not be doing my "duty if I do not express the very " strong feeling I entertain of the " obligations I owe, and the House " owes, to Sir Julius Vogel for his " untiring efforts to obtain such legis- " lation from the Imperial Parliament "as will render the Bill of any real " effect." And he went on to say that he had no doubt that in a few years a very large saving would be effected by the conversion and consolidation of New Zealand stock. Well, the years have been somewhat long in coming; but as all things come to those who can wait, so the tide has at last turned in our favor. In the Financial Statement of the present year there is no hint of the Government's intention to venture on the conversion of loans, unless the following sentence may be accepted in an oracular sense. " The "last fact I will mention is "an important one—the greatly im-

"proved credit of the Colony in " London. I will only give a single " instance. Eighteen months ago (in " January, 18S8) our 4 per cent, stock "was selling rather heavily at 96|; "it is now worth from 105 to 106, " with an active market. I venture to "think we shall see a further rise " when our true present position comes "to be fully known, and a fair and "unprejudiced comparison is made " between New Zealand and the other " Australasian colonies." Tt may be said that Sir Harry Atkinson has been fortunate in holding ollice just as the wave of depression rolled past, and that ho has only availed himself of a favorable opportunity. But it is one thing for opportunity to exist and another to be able to recognise and seize it. After all, has not the opportunity been created by the improved financial position of the Colony, and is it not to Sir Haruy that the improved position is primarily due?

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LOAN CONVERSION., Issue 8051, 30 October 1889

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LOAN CONVERSION. Issue 8051, 30 October 1889

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