THE NEW LOAN.

Evening Star, Issue 9702, 10 May 1895, Page 4

THE NEW LOAN.

TO THE EDITOR. Sir.,— New Zealand has sold a million and a-half pounds worth of £IOO bonds for £94 10s each, and many people are jubilant because the money has been obtained at 3 per cent. To my mind the colony has not made such a good bargain as appears at first sight. It is true that 3 per cent, is the lowest price for colonial loans on record, but considering the extremely low rates at which trade bills are being discounted in London, and taking into account the plethora of money seeking investment, and allowing for the discount allowed upon the loan of £5 10s per cent, (the difference between £IOO audi £O4 10s), there is nothing in my opinion to crow about. The moncy-lcudcrs have, as New Zealand will yet find out, got the best of the bargain, and I have no doubt that Mr Ward will b e knighted fur the w\ he has done them, °

The general tendency of interest is-to fall. Money cannot find profitable investment in trade; there is therefore an abundance of it practically lying idle. Provided that the present monetary system of Great Britain remains unchanged, interest is certain to fall much lower, and the loan just negotiated may yet, before many years have elapsed, be converted into a 2 per cent. one. However, be this as it may, the question is : Is New Zealand wise to borrow more than she is compelled to do to meet existing engagements? I do not think she is. The loan under notice is said t:> be for the purpose of making advances to farmers. With much lower prices for the average of our produce a contingency which, under existing conditions, will for an absolute certainty arise—how are our producers to bo benefited ? Is a small saving in interest going to save them from ruin ? I think not.

If instead of our Treasurer paintiug the lily as he has clone by persuading the people of London that this unprosperous colony is prosperous; if instead of adding to our future misery by increasing our obligations he had gone to work and - told them that our only hope of salvation lay in better prices for our produce; if he had gone to work and pointed out the real cause of the low and still lowering prices from which we are suffering, then he would at least have done his duty and have conferred a benefit upon the community which he represent;*. It is very easy and simple to sing 'Sweet, pretty cookie,' and to sail along in the swim that pays, but it is more to the point, where the public good is at stake, for a public man to grapple with the monster—no matter what the cost may be to himseif—that is devouring the wealth (not money) his people possess. Under existing conditions New Zealand is, in my opinion, most unwise to borrow, and any man or body of men who are instrumental in borrowing on behalf of the colony are amongst the worst enemies it ever possessed. In a sense the new loan will be a temporary benefit to local trade, but at what an ultimate cost. Producers, instead of borrowing from London, should have the money coming to them through the agency of better prices, and the sooner they insist that the colony shall ring from one end to the other with a demand—a just demand—in that direction so much sooner they will do their diuy to themselves and to those who come after them.—l am etc., Arthur M'Donald. Dunedin, May 8.