THE FIRST SHOT.

Lyttelton Times, Volume CXXIII, Issue 15968, 29 June 1912, Page 12

THE FIRST SHOT.

PARLIAMENT DEBATES AN OLD SUBJECT. RECENT LOANS UNDER. FIRE. [From Cos ConuEsroNDSNT.j WELLINGTON, June 28. The first business of Parliament, if it could bo dignified by such a title, was an unilluminating debate on loans, in which some member* talked in very small circles. It was introduced by the leader of the Opposition, who asked for details of the recent four and a half million loan.

The Minister of Finance (the Hon A. M. Myers) sparred round for a time, indignantly repudiating the suggestion that the Government was trying to hide anything and stating that details would be given as soon as they were complete. Mr Myers eventually stated that from November laet up till April there were maturing in London loans for £2,28-3,500. The bulk of the 4} million loan was raised for advances to workers and settlers, land for settlement, naval defence and public works. Mr Fisher: What did the loan cost? Mr Myers: It was raised at 99, subject to the underwriting commission of 1 per cent and the usmtf charges. "I know," Mr Myers added, "what is in the mind of members. They are thinking of the short date of the loan." Mr Allen: '' For two years. if our million and a half?" ~,,,. Mr Myers: "Yes." He added that the market was not favourable for a stock loan for a long period. He was persuaded that every member, on learning the details, would givo him credit for a vary good loan. In interest it would cost £3 12s, independent of discount. It was hoped that at the time of maturity tho market would be such as to enable a favourable conversion to bo made. Mr Massey hotly denied that he had been actuated by party motives in asking for the information. He was strongly of opinion that the loan was costing"s per cent. „,,.,, Tho Prime Minister: Could it have been raised cheaper? Mr Massey: If it had been raised at the right time. If it had been raised a few months before the labour troubles it could have been obtained tor a long period at a low rate of interest. The Prime Minister said that it was admitted that the best .had been done. Ml details would be given as soon as they were reasonably complete, _ Mr J Allen asked by what authority any money for naval defence had been raised in the present loan. The whole authority for naval deface had been contained in the five million loan Mr Myers: Only a portion. It was authorised, but not raised. Sir Joseph Ward said Mr Massey was under a misapprehension if ho favoured a long-dated loan in the circumstances. It had not been possible for a long time to go on the London market for a largo sum without underwriting, and the extra i per cent necessary for a loan for forty years would have meant an extra cost of £900,000, or for thirty years £750,000. It was absurd to suppose that the Stock Exchange could be forced into doing what it did not wish to do. ~ Mr W. Fraser said that no one coma blame the Government for the bad state of the money market, but he did protest against short-dated loans, and Parliament should see that the Government was not in the position of having to raise loans regardless of the state of the market. The debate was oarried on by Messrs Herdman, Wilford and Fisher, Mr Wilford's principal point, being that the Government must depend on its financial advisers in London. On tho second reading of the Imprest Supply Bill Sir Joseph Ward replied to suggestions by the Opposition that the Ministry had been the victims of circumstances created by him. He had stated in tho short session that he was not justified in raising a four million loan in view of possible changes of Government, and his position had been justified. Sir Joseph Ward went on to show that renewals were effected without loans or underwriting, and he quoted the low cost of conversion of loans with an annual saving in interest from time to time. In order to attack a public man, the financial position of the country was distorted by various Opposition newspapers, and the effect bevond New Zealand was bad. The "Bulletin," which had been quoted in an Opposition newspaper, had stated that the five-million loan fell due in 1914, whereas the greater portion of it had been converted into inscribed stock not due till 1940. Sir Joseph Ward was interrupted by the Spoaker's bell, and Mr Myers briefly replied on the motion for tne second reading. On the third reading, Sir Joseph Ward referred to the value of the Public Debt extinction fund, and contrasted the Opposition Press of Australia with that of New Zealand, remarking that in Australia the Press had faith in the country and defended it from aspersions. The criticisms here were intended to crush him out of existence and leave the impression that he had left things in a mess. The financial position at the end of the year was the best on record. If the party at the last election had had a strong majority he would no doubt have raised the four-million loan, although the rates subsequently might have dropped, but in the circumstances he was justified in the course he had taken. If borrowing was to go, the House would.have to carry a resolution that it was going to reduce the facilities of the people for getting their produce to-market and making homes for themselves on the land, and that would bo a suicidal policy. Mr Massey agreed that the party spirit should not be introduced into financial matters. In fact, he had never raised financial questions for partv advantage. The Minister of Finance had declared that the country's stocks stood as high as those of any Australian Stato, so how could he maintain that the criticism had done harm He considered that the Opposition had saved the country thousands and thousands of pounds by its criticism and keeping the. Government up to the mark. To-night was tho first time tliey had received any information concerning loans. Tho fact that two millions had been converted was very important. It was highly important that short-dated debentures should he converted. Investors in London did not look to criticisms of the House to guide them; they looked to securities, and the quantity of exports. The financial people at Home were reaping a rich harvest out of mistakes made here. He understood perfectly that the country could not go on without borrowed money. They should also obtain their capital at the very lowest rate and spend it to tho host possible advantage. • Mr Fisher said that jf the I'inance Minister would take the House into his confidence there would be no need for them guessing. Mr Fraser advocated the setttmg up o* a committee to examine into every detail of every loan. The Public Ac* i counts Committee could not do this,

as it could only deal with matters that wero referred to it by the House. Mr Myers, in reply, said tho Ministry would welcome tho fullest criticism of all matters. Ho was glad to hear remarks from Mr Massey that ho would not lot matters financial become a party question. With regard to the four and a half millions loan, he stated that had it been floated at four per cent for thirty years at par it would work out at £4 2s o}d. . The full interest charges on tho loan, not including discount, amounted to 1J per cent. The Bill was read a third time and passed. The House rose at 9.45 p.m.