POLITICAL NOTES.

Hawke's Bay Herald, Volume XXX, Issue 10071, 12 August 1895, Page 4

POLITICAL NOTES.

(By Notus.)

Among the many peculiar proposals in the Financial Statement ths fo'lowiug copied from the New Zealand Times probably stands unequalled as a pecuibr financial arrangem nt:— "ln connection wltb the consols acconnt exception has been taken to our having depnsltnd wltb the Colonial Bank tbe sum of £150,000 at 4 per cent. Tbe deposit mady wnq strictly in accordance with law, was uaslneeslik?, and advantageous to tbe colony. At the time the transaction took place tbe colony owed the bank £100,000, tbe payment of wblch did not fall dne nntll Jane, 1895. On maturity, this w»a ienewpd for 18 rnontbs at a rate of interest of 3J par aent. The hank thus pays tbe co'ony i per cent on £150,000, and the colony pays the baDk 3} per cent on £100,000 " It will be seen that in June List, although the loan cf £1 500,000 had just been raised, the Gov eminent owed tne Colonial Bank £100 000 which it was not apparently oanvenient to pay, and tbe bill was therefore renewed lor eighteen months at 3J psr cent. Abont the same time the Government having sold £150.000 worth of consols to the Bink of New Zealand nt 3| per c.nt lends tine money to tbe Colonial Bank at 4 per cent I

Tnere we have one of the strangest pieces of finance tbat has probably ever been recorded in a Financial Statement. The country being Indabted to the CaloDlal Bank In a sum wblch id was inconvenient to pay cwries out a process which ia not nnknown among coma, ••> ciil wen ot renewing the bill nnd then suggests to tbe Bank of New Zealand the propriety of its investing £150,000 in 3J per cent consols tbe mocey being deposited in tbe Colonial Bink at 4 percent, aud thia done txt a time when tbe banks will not fcive 4 per cent for fixed deposits in tbe colony. The Govern ment being indebted to this CoioDlal Bank in the snm of £100.000, nnd having by arrangement with the Bank of Now Zealand £150,000 in hind, might have paid their debt to tbe Colouinl and then deposited the balance, £50,009, at interest. If the calculation is wotked ont it will be found that the Colonial Bank really pays 5 per cent on the balance dne to the Government.

How the shareholders of the Bade of New Zealand will like money wblch they have borrowed at 4 per cent to be permanently locked np at 3& per cent, and how the shareho'hers of tho Colonial Bink will take an arrangement which is equivalent to paying 5 per cent on a deposit of £50,000, is one of those things an ordinary mind cannot understand, Tbere mnet be something behind the scenes which has not been disclosed. No one will believe that the directors of the Colonial Bank have made what appears to be such a foolish arrangement as the Colociol Treisnrer says they have, and probably before the cession Is over we shall find some legislation brought in which will explain this exceedingly peculiar arrangement,