NEW ZEALAND’S CREDIT.

New Zealand Times, Volume LXXVII, Issue 5558, 8 April 1905, Page 9

NEW ZEALAND’S CREDIT.

COMPARISON WITH CANADA. STATEMENT BY TUB AGENTGENERAL. (From Our Special Correspondent.) LONDON, February 24. My last budget of newspapers from tho colony brought tho full report oi the speech delivered at Auckland by Mr Maas-cy, tho leader of tho Opposition, With the political opinions of Air Massey a London correspondent is not. concerned, and the only reason why I now refer to his speech is that it contained certain criticisms upon tho last New Zealand loan, which seem to call lor a reply from tho who financed tho loan in London. Mr Beeves, however, stated that ho could not enter into argument With Air Alassey, because that gentleman was a member of Parliament. I, therefore, on iny own account, asisedliim two plain questions. Would it be correct to say, X asked, that tho colony will probably pay nearly 41 per cent, for tho loan floated last December? “ Certainly not,” replied the AgentGeneral. In case the debentureholders do not convert, the taxpayers will pay for seven years (allowing all. costs and charges) nothing like 4/ per oent. —not even 4J per cent. Indeed, it would bo about 4J. If. on tho other hand, the holders of the loan convert their debentures into 3) per cent, .stock during tho next seven years, as I believe most of them will, then the interest, anil work out at considerably less lhan I per cent. For instance, if they convert within two years, receiving, therefore, £lO3 lor each £IOO debenture, the amount per annum required to meet tho extra £3 on tho dato of the redemption of tho loan thirty-three yeans hence trill bo ono shilling per cent. Tho annual charge in case of conversion will tlitis bo £3 Ils in all—a very different thuig to 4J per cent.” Have you any special reason for believing that most of tho debentureholders will convert into 3) per cent, stock ? ‘‘Yes. T have.”

It has often been said, Mr Heaves, that, considering our climate and resources. tho credit of New Zealand should be as good as that of Canada. What have you to say on that point? “ Tho credit of New Zealand is good. i)o you mean that tho New Zealand Government stocks ought to b© quoted at as high a price as the Canadian ?” Yus, that is my meaning. “That is not reasonable. In the first nlacc, the Canadian Government has not raised a loan in London for many years, except on© loan for the purpose of conversion and redefinition. Tho total Dominion debt in London stands at about thirty-seven millions, sterling to-day. It has not increased of recent years. Moreover, some of it. has been bought no for tho Canadian sinking fund, and this has helned to keep tho price high. If New Zealand had not borrowed bore for tho last twelve years, I have no doubt whatever that our stocks would ho ’ quoted at the same price as the Canadian. That would bo an 'excellent thing for the holders of our earlier loans; but without borrowing, our - policy of public works, land repurchase, loans to farmers, etc., etc., could not have been carried out-by the State. Wo should have had to follow the Canadian plan, and have our railways made by private _ syndicates, leave our great estates in the hands of private owners, an dour farmers in thb hands of private moneylenders. lam not hereto discuss to-day whether such a policy would have been preferable to ours. The point is that the people and the Parliament of New Zealand .have emphatically declared against the Canadian plan. When writers point to tho smallness of tho Dominion debt and tho high price of tho Government stocks they forget tho enormous sum represented by tho cost and indebtedness of the Canadian railways. The paid-up capital of those railways is over two hundred millions sterling, on which hug© amount nuorost or dividends have or ought to bo paid. . Th© who!© of this immense burden has to bo homo by tho industries and producers of Canada, just in the Same way as tho charges on our own railways have to be borne by tho industries of New Zealand.. In tho ono case tho cost of th© railway appears in tho national debt; in tho other it does not, but the industries have to bear it all tho same. What you have to compare is not th© nominal amount of the Government debt in each country, but th© relative prosperity, over a long series of years, of the people of tho two countries, and tho standard of comfort obtaining in each. “Among tho disadvantages of tho construction of railways by private companies in young countries,” continued Mr Peeves, “is, of course, the suffering of shareholders and others when the railways fail to pay. As a glaring example of this in Canada, look at thol ordinary stock of tho Grand Trunk system —twenty-two millions sterling, on which, no interest has been paid for many years. Look at the third preference stock of the same company—sever, millions sterling. No interest is paid this year. Last year quite an excitement was caused when two per cent, was paid. On the other hand, in tho case of that prosperous railway, tho Canadian-Paci-fic, the producers served by, it have to provide six per cent, dividends for the shareholders. Again, remember that the various Canadian Governments have raided tho , railway construction companies to tho tun© of forty-four millions sterling. The State has paid over this, and yet does not own tho railways it helped to make. “Moreover, remember this, that fortunate country as New Zealand is, excellent country as it is, still it is not half a continent as Canada is. It has not the immense area of land—level, onen land—that the Dominion posses ses. And it is not within ten days’ steam of Livornool. Nor does it snend yearly one way or another, scores of thousands of pounds in advertising itse'f in Great Britain.” It is I think, a pity that tho AgeptGoneral could not seo his way to rcplv to Mr Massey’s attack on the financing of th© loan. It is not a question of party politics at all. The matter is one affecting tho colony as a whole, and tho A Hen* -General. as the colony’s representative. would, in my op'nion. be amply justified in defending himself against criticisms which reflect upon his Rnaneiill ability. Mr Massey on finance to be sure, is a critic whose shafts fly harmlessly enough, especially when the target happens to be tho solid wall of achievement now standing to the credit of the colony’s financial agon’ in London. But, though tho latter can afford to ignore the attacks of ill-in-formed critics, I still think that his official position should not deprive him of the right to show the public where theso criticisms fail.