THE FIVE MILLION LOAN.

Oamaru Mail, Volume XXXVIII, Issue 10628, 3 December 1910, Page 4

THE FIVE MILLION LOAN.

OPPOSITION'S LAST TRENCH. EFFECTIVE REPLY BY PRIME MINISTER. By Telegraph. •(From Our Owii Correspondent.) ' "Wellington, December 2. The first reference in the Public Works debate to the five million loan occurred in Mr Massey's speech this morning," in the remark that from a financial point of view its reception was the most serious rebuff the Dominion had ever experienced. The Prime Minister That is not the opinion,in England. Mr Massey: It is a serious state of things wheu. Tasmanian tliree and a-lialf per cents are at 99; and ours are 96, in spite of the- fact that a-lialf year's interest is due on" them. The Prime Minister: How is it that the financiers took them at £9B 10s?

Mr Massey: i think it is my .duty to call attention to the fact that a five million loan was far too much to place ou the London loan market at any one time, and, in tho words of Joliu Ballance, what' lias happened in connection with this loan is enough to make sane men pause. It is a difficult job for the Opposition to keep the Government straight and keep it from ruining the country. The idea seems to he to get something for nothing, mortgage the country as heavily as possible, and. let posterity take care of itself, but if we follow that course all the lessons and theories of political economy go for nothing.

The Prime Minister said that the Leader of the Opposition had seriously warned the Government in regard to the last loan, but lie thought Mr Massey was unfortunate in his expressions. The country had every reason to be satisfied with the result of the flotation. When the loan was floated the Bank of England discount rate stood at 5 per cent., and that day lie had a communication from the Old Country stating that the bank rate was 11- per cent. The loan had been taken up at £9B 10s, and not at £96, persistently stated byone newspaper writer. It was also untrue that the Bank of New Zealand had underwritten the loan. It had never been asked to do so.' Everything was done in London and, if the Bank of New Zealand had taken a- portion of the loan, as might be possible, it must be a very small amount indeed; but it had not been, taken up at Ids request. At an}- rate the Bank of New Zealand's share could not possibly be more than £IOO,OOO. He personally would not have been agreeable, even if the Bank wanted to underwrite a. loan to the extent of five millions. In the minds of some of the greatest financial houses in London they looked upon New Zealand as so satisfactory that when the Bank of England rate was 5 per cent, they underwrote the loan for 3J per cent, at £9B 10s, and from every standpoint that was not only very satisfactory, but he was doubtful if any other country, putting such a loan on the market could have done better. He had discussed with two or three leading financial men when last in_ London goins; on the market for a big loan, and asked how it would be received. They told him that a two-million loan would not be so satisfactory as one for three or four millions. At that time he had foreseen necessity of a large loan. Anyone who expected that there would not be a temporary depression in our JU per cents expected the impossible. He was not going to discuss the merits of the Dominion's share in the defence of tlic Empire, but the aggregate of the loan had been swelled by the inclusion of £1,250,000, which was to go towards the cost of the Dreadnought. The comparison with Tasmania was odious, because that State's financial operations in a year was not much more than New Zealand's in a month. A fair comparison could only have been made if Tasmania at the same time had been endeavoring to float a proportionate loan. The five million loan was being unloaded in London now and it was only natural that there should be a drop 011 the open stocks.

Mr W. H. Hcrries said that he quiteagreed with tho contention that it would be unwise to discuss" the five million loan until they Knew tho full details from the English papers and were able to compare other loans floated at the. same time, but he confessed it had come as a- shock tn him that underwriters should have to take probably tho bulk of the loan.