N.Z. MAIL PUBLISHED WEEKLY. FRIDAY, JANUARY 10, 1890.

New Zealand Mail, Issue 932, 10 January 1890, Page 16

N.Z. MAIL PUBLISHED WEEKLY. FRIDAY, JANUARY 10, 1890.

It must be confessed that a singularly small amount of information is conveyed by the English cable messages which

INVESTMENT OF TRUST FUNDS.

have reached us from time to time during the past few weeks relative to the investment of English Trust funds in colonial securities. The various telegrams have been so ingeniously constructed by the senders that if'they were ever meant to convey any definite intelligence, which appears opeh to doubt, this has been most,completely Concealed. Not one of thetelegrapnic statements on this subject has furnished the slightest enlightenment as to the probable outcome of the real

points of importance actually at issue. All wo cart learn authentically through the cable is that the investment scheme was nearly ready at Christmas, and that the Committee would most likely report on the 2nd instant. Judging from one press message published on this subject, the very point mainly in dispute is entirely misunderstood by the sender. The statement that the intending investors denied the truth of the allegation that they demanded a right to seize and sell the railways of any defaulfc'ng Colony in satisfaction of their claims is highly ridiculous. It was never pretended that any such claim was set up by them. On the . contrary, the investors of the class in question that is to say, the holders of large trust funds who experienced serious difficulty in finding sufficiently lucrative, yet at the same time, safe investments for those funds—were notoriously most desirous to have the present restrictions on trust-fund investments removed, and were not at all particular in insisting upon the safeguards referred to. They wanted the Government to bring in a Bill relieving them of the personal liability which otherwise they would incur by investing in colonial stock, and the colonies were equally desirous that this should be done, as tending to improve the value of their securities in London. It was the Imperial Government that stood in the way and insisted on various stipulations being agreed to before they would consent to promote such a measure as was desired. The Imperial Government deemed it irnpera tive to move with the gravest caution in the direction of relaxing any checks on the investment of trust funds They very properly held it their paramount duty to guard most jealously the interests of the benefi ciaries of trusts, and it was they who, in the fulfilment of this duly, went to what we have contended to be extreme lengths in demanding that an undue preference should be given to creditors of the class proposed to be created. In our former article on this subject weexplained very fully the ease set up on bothsides Briefly.it was this ; No special facilities of recovery are provided for the public creditors of the colonies ; they can only sue in the ordinary way, and if a judgment be obtained against a Colony it can only be satisfied pecuniarily by a vote of t he Legislature. It was urged by the Imperial authorities that if trustees were allowed to invest in colonial stocks the funds entrusted to them they ought to be enabled to sue in England any Colony in the event of default (as regards payment of principal or interest), and that special provision should be made for the prompt satisfaction of any judgment obtained by a creditor of that class, such provision being either the permanent deposit of money (or readily convertible securities) to a proportionate amount, or else the concession of a preferential right to seize and sell the Government railways of a defaulting Colony, or so much of them as might be needed to make good the claim. It was against this stipulation (preferred by the Imperial Government at the special instance, it is understood, of the Lord Chancellor, in his official capacity as the guardian of all such interests) that the Colonial Governments generally, and the New Zealand Government in particular, maintained an attitude of uncompromising hostility. A concession of this sort was rightly condemned as humiliating to the colonies, and prejudicial to their credit, if not in itself essentially improper as giving an unwarrantable preference to particular creditors. Here, theD, lies the difficulty to be overcome : How to conserve the interests of English trnst-fuud beneficiaries to the satisfaction of the Imperial judicial authorities, without placing the trustees in the position of preferential creditors and without giving them special and undesirable powers of execution. The Colonial Governments have held that no grounds have been shown for any exceptional treatment of these cases, and that if the advantage of having colonial stocks declared a legitimate investment for trust funds can only be purchased at the cost of making the concessions claimed, it was not worth having on such terms. Wo entirely concur , in., .this view. It would be in ourr opiniom quite indefensible to create a new-and privileged class of preferential public creditors; and the step could npf fail to be detrimental to colonial credit. It is rumoured that the Imperial autho ritiee have become converted to this

view, and that the claim made toaspecial lien over the colonial railways will be abandoned. If the enigmatical telegram as to the disclaimer of this demand by the intending investors were meant to convey the idea that such a claim was never made by the Imperial authorities, we can assert from our own knowledge that it is utterly incorrect. We have seen the demand in black and white But there seems reasou to believe that this untenable condition will not be pressed, and that the negotiations may yet lesult iu a settle ment that should be fairly satisfactory to all parties concerned.