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New Zealand Mail, Issue 243, 15 July 1876, Page 13

It has become lately the fashion amongst some who know little about the matted?, to make out that the credit of New Zealand in the Home money market is just about as bad as can be. They base these statements on the fact that recently a difficulty was experienced in placing the balances of the authorised but unguaranteed loan. If the gentlemen who write so easily would only read a little, they would find that the difficulty as regarded New Zealand loans arose, not from any discredit attaching to the colony, but simply from the existence of a most abnormal condition of things in the London money market. There it is not too much to say that money is absolutely cheaper than it ever was ;* indeed, there are merchants in Wellington whose last advices from Home informed them of their being only charged 2 per cent, on bills which a year ago would have to pay a much higher rate. But it is a fact nevertheless that there is a general reluctance on the part of those investors who usually purchased debentures of English colonies or of foreign countries to purchase them now. That reluctance is owing to circumstances that have produced a purely evanescent state of feeling, and which arose in the following manner. The investors in colonial or foreign securities have always come from amongst the class which, with a certain fixed and limited capital, have endeavored to obtain for it the highest possible rate of interest on what was thought a secure investment. Ladies and gentlemen possessing £SOOO, we will say, in "cash, in order to live on the interest of the same, have sought investments other than in the English funds, where though, as some character in a novel says, " the security is undoubted," the rate of interest is very low. Accordingly, for some years they sought after colonial and foreign stocks, and until a crash which came recently certain foreign stocks became more and more the most fancied form of investment. This arose from the very great increase in the cost of living which has of late grown up in England, and which made it necessary for the possessor of such a capital as we have mentioned to obtain seven, or even ten per cent, on his money, where he had previously been contented with five or six. As a result he invested in the worst kinds of foreign securities, those of South or Central American Republics, or in Turkish or Egyptian bonds. The results of the investigations of the Committee on Foreign Loans exploded the former. Turkey and Egypt have of their own accord commenced a system tantamount to repudiation. The result is a perfect scare on the part of the smaller investors, from the effects of which, at the moment, colonial securities suffer, but the whole tone of the financial articles in the London Press points out that shortly these securities will take their proper place and become the favorite stock for those who must obtain a certain annual income from the capital in their possession.