THE LOAN.

New Zealand Times, Volume LXXI, Issue 4527, 2 December 1901, Page 4

THE LOAN.

“ Nothing succeeds like success.” The Government of New Zealand issued a million aud a half loan the other day, fixed a minimum price, equal to the best or the many prices obtained recently by Australasian loans, and after the week allowed for responses, got the money at the price fixed. New South Wales had not long before got four millions sterling at that price, namely, 94; West Australia, less lucky, had had to bo satisfied with 91; Queensland got a nominal 91J, which in reality meant about 88; and Tasmania got something under half a million at 92. In the face of these experiences, the success of our most recent loan at 94, the top price, is a success that is genuine. It reminds us pleasurably thqt all financiers, British and Australian, are agreed that the credit of New Zealand stands first of all the colonies of the Australasian group. Point is given in a very effective manner to this conclusion by a circumstance which has only just come to light. It is that of these Australian loans lately floated tjie larger bulk remains in the hands of the underwriters. Amongst the crowd there is a mass of two millions of the Now South Wales loan which cannot get placed, and about which the underwriters are not too well pleased. It speaks uncommonly well for New Zealand that, with such enormous loads waiting to be discharged, there never was any difficulty in getting the whole of our million and a half underwritten at the “top-notch” price of 94.

But this is not all. There are two other circumstances which conspired with the comparatively low credit of Australia to make the situation exceptionally adverse to New Zealand. Firstly, a huge Imperial war loan may at any time come upon the market. Secondly, the local bodies of Great Britain are rushing the market with loans to which ours is a small thing.by comparison, on the same terms. Of the first, it is unnecessary to say much more than that war loans are the paradise always of the underwriter, the “stag,” and the speculative operator who flourishes at such times under various aliases. With the immediate prospect of tho large and certain profits of a war loan, it is a great thing that there was found in London sufficient faith in this colony and its resources, to say nothing of its Government, and its experimental legislation, to underwrite for it a loan of a million and a half, without a question or a qualm. Still more satisfactory and w'onderful is this in view of the complications of the money market hy the loans of the local governing bodies of Great Britain. What British investor, when he can get a satisfactory three per cent, investment within the boundaries of his native land, is likely to travel to the Antipodes to get the same three per cent for his money ? The municipal securities of Great Britain are, let it be remembered, among the very best of the “gilt-edged” securities of the London money market; yet the competition of these, now especially severe, did not prevent our million and a half loan from being underwritten fully, nor did it prevent a large number of applications from

bona fide investors. Hero wo Have throe adverse causes—the imminence of a great war loan for-the Imperial Government, the competition on cotta! terms of tho best local securities, and the sticking of the best Australian securities in the mud. It is a situation of unprecedented adversity. Tho success i of our loan at such a price ns 0-i, in j spite of that situation, is equally un-1 precedentcd. ® Thero is another thing as unprecedented. It is that local critics Have referred to tho loan as if it had not boon floated at all. They speak of it as having been let go on terms so adverse ns to show tho approaching bankruptcy of our financial resources. They actually propagate the idea that there has been something -phenomenally disastrous in tho result of tho appeal to tho money market. The fact, as wc have shown, is that the money has been obtained at tho “toy-notch” Australasian price—the price wc ourselves, with proper respect for our credit and position, fixed as the lowest wo were prepared to take. Wo have got it, moreover, in spite of an unprecedentedly adverse combination of circumstances. There will no doubt bo a host of outcries against the heavy borrowings of late years, as set forth by various Opposition orators last session during the course of the financial debate. There may likewise bo a fresh outbreak of the barkings about the effect of our treatment of those powerful magnates whoso names figure so prominently on tho list of the Midland Hailway debenture-holders. But the more enlightened world knows that seventyfive per cent of tho borrowing of the last decade, about which so much rubbish has boon talked, represents a system of self-supporting finance which not only passes by tho pockets of tho taxpayers, but increases their numbers and adds to their power to pay. It is also perfectly well aware that the dealers in money and tho investing public have no sentimental grievances about the sufferings of tho losers of money. Too many people lose money on the Sleek Exchange, and too many of those losers have long stories to tell about tho shocking conduct of other people, for any serious note to bo taken of the vaponrings of a sot of financiers who, after exhaust ing every legal resource at their command, throw themselves on the mercy of Parliament. All these criticisms the colony can afford to laugh at. Tho only persons who aro entitled to any commiseration in connection with tho loan arc the underwriters, who arc face to face with a discount 'instead of a premium. But they wore probably awaro of the adverse position, and they know that there is no reason why in a short time onr throe per cents, should not go up again to their figure of 97, quoted not a month ago.