The Hastings Standard Published Daily. THURSDAY, NOV. 26, 1896. THE NEW LOAN.

Hastings Standard, Issue 181, 26 November 1896, Page 2

The Hastings Standard Published Daily.

THURSDAY, NOV. 26, 1896. THE NEW LOAN.

For the cause that lacks assistance. For the wrongs that need resistance, For the future in the distance. And the good that we can do.

In the Standard of this week it is notified that the first half of the million loan authorised last session is to be raised locally and applications are invited ; the rate of interest being fixed at Hi per cent. The idea of raising State loans locally is no new thing in the colonies. In South Australia, Victoria, and New South Wales, tenative efforts cf this nature have been fairly successful. Even with us the novelty has worn off, for under the Consols Act of money has been raised in New Zealand to a limited extent. True the terms "loan" and " borrowing " were not mentioned in connection with this Act, nevertheless the money obtained by the operation is in the nature of a loan. The term consols is high sounding and is no doubt intended as an imitation of the British funds ; but consols at Home is the term applied to the consolidated national debt, and with us it refers only to a loan of half a million. But to return to the new loan. This we are assured will be a success, and we have so wish to question the state-

ment ; indeed we think we can prove conclusively that the flotation will be a success. We are by no means opposed to local borrowing, on the contrary we rather approve of the scheme, even though it should involve the colony in slight loss. The neecl of a gilt-edged security, safe in every respect and easily realisable has long been felt in the colony, and although the average investor is content with a first rate mortgage, there are others with funds to invest who ought to aim higher. Where safety and not interest is the main consideration, state bonds are the best. In England trustees are limited to certain investments, and it is a sore point with the colonies that their stocks are not considered good enough for the investment of trust funds. In the colonies restrictions of a somewhat similar character will have to be made with respect to trust funds, and colonial securities should be sufficient for their investment. Then again most joint stock companies seek to build up a reserve fund, and while many have succeeded the fund is not treated with proper respect. Instead of being invested outside the business, in some liquid security, the reserve fund, except in rare instances, is invariably employed in the business of the concern and treated as so much additional capital. In State bonds, joint stock companies will find the safest and best form of investment for their reserve funds. The money so invested would be earning a small rate of interest and would be available in case of emergency ; that is to say the reserve fund can be set to its proper functions. The public have not yet realised the importance of this class of investment, but as the tendency is for lower rates of interest, combined with safety, we have no doubt New Zealand consols and inscribed stock will become popular. In tiie present state of fhe London money market witli the Bank of England rate of discount at 1 per cent, no Government- would be justified in approaching the Home investors. Mr Seddon has had no need to trouble the London capitalists having long ago obtained the money he required from the people of the colony as represented by the lending departments of the State. The notice inviting applications for the new loan, may be viewed as purely a formal matter.