THE CANTERBURY LOAN.

Otago Daily Times, Issue 827, 15 August 1864, Page 6

THE CANTERBURY LOAN.

(From the Press)

The following letters and memorandum relative to the measures to be taken for the.'negotiation of the Canterbury Loan, have been placed ,at our disposal for publication : - LETTER FKOJI TH*1- SUPERINTENDENT OP CANTERBURY TO THE COLONIAL BKCOE.TAB.Y. Superintendent's Office, Christchurch, 9th July, 1864. Sir—The difficulty which is experienced in the negotiation of debentures issued by the Provincial Governments of New Zealand, is ODe which is likely at the present time to be very prejudicial to the interests of Canterbury. The bridging of our large rivers, the extension oi the railway, and other large works which are ' necessary to the development of the resources of the Province, could not be advantageously proceeded with till that difficulty is removed. I am led to believe that the refusal of the Committee of the Stock Exchange to allow debentures issued by Provincial Governments to appear in their official list, is an objection to their negotiation which even in a more favorable condition of monetary affairs in England, will prove detrimental to the interests of the provinces of New Zealand. , . After careful consideration I have thought it well to request Kr Hall, who is a msmber of my Executive Council, to proceed to Auckland to represent my views to the Government on the matter, and to request them to adopt such measures as will place our debentures m a more favorable position, and remove the objection which appears to exist to them from the want or a guarantee of the General Government of the C°Mr yHall will be able at the same time to explain more fully than I could by.letter the present Lancial position of the Province, and the neces- , rity of the works which I wish to see earned °UI have to request that you will give him an opportunity of laying; before the Government my views and those of my Executive Council, on a matter of such importance to the Province. I have the honor to be, Sir, .-. Your obedient servant, (Signed) •S. Beaxey, _ Superintendent. The Hon. the Colonial Secretary. &t E jiorahdtjh Submitted to the Colonial j Secretary ur Mk J. Hall. The following memorandum on the existing financial condition of the Province of Canterbury, and the works proposed to be undertaken by the Government of that Frovince is submitted in accordance with the request of his Excellency's Ministers. - I.—EXISTING PROVINCIAL DEBTS. These consist of four:—-,;;, 1 The original debt ofgbe Canterbury Assopose of immigration several years since, at an fcptcinf^hS^^^^Sel^ fcKy teen invested on account of the sinkhS find, and LI2OO has been invested annually. Union Bank of Australia for negotiation on which a sum of L 50,000 hasbee * adranoed^Jy the Bank. According to the latest advices from London only L30,000,0f these debentures have been sold. . ~ -loen'w.. 4. A loan of £500,000, sanctioned m 1862,ibearing six per cent, interest, and one per cent, sinking fund. Of this loan £50,000 was _ soldl fa Canterbury last year. No further portion has been placed in the market. The above figures are taken from a statement

of account* made up to the first April last, which has b°tn materially mortified sine; that time. The indebtedness of the province may therefore be sail to staid a3 follovss :— Total amount of loans sanctioned exclusive of Canterbury Association tleoentu re £830,000 Total amount rctually raised £130,000 Cancelled out of provincial revenues £50,000 £130,000 Amount widen may still be raised under existing Ordinances £050,000 - The total present debt of the province is there - fore £12-1,000 against which, it had on Ist April last sppnt £212,000 on the Lytteiton Railway. A portim of this railway is in operation, and is let fov three years at rate* increasing from 6 to. 10 p3r cent on the cost of construction. ll.— TERRITORIAL REVENUE. The land revenue of Canterbury for the past two years has averaged ,L 200,000 There are six EuiQion acres let under pasturase .licenses, of which it, is considered in Canterbury an under estimate to assume that 750,000 aces will be sold within the next 10 years at L 2 per acre. This will give an average income from the sale of rural land of ... . .£150,000 The iroeeeds of town lands may bs taken at ' ... ~. - - I^oo The pasturage rents amount to 17,0UU £177,000 After consideration of the necessary charges on this revenue for expenses of management, surveys, roads, buildings, &c, the Superintendent and' Provincial Council have set apart, by an ordinance called "The Railway and Harbor Works Fund Ordisanee." two-fifths, of the territorial revenue towards the railways and harbor works. This appropriation, so fixed by law, may be estimated to yield at least L 70.000 per aanum. Into this fund must be paid the profits from the Lytteltou and Christchurch Kailway which, on the completion of the tunnel, in less I than two years, will be considerable. I lII.—INTENDED WORKS. !It has, in the opinion of the Government of | the province of Canterbury, become necessary to I the development of the resources of that province, | and to its materi:d progress, that improved means of internal communication of an extensive character should be entered upon. Two obvious reasons for this are— 1. That the cost of transporting agricultural produce to a port of shipment by'ordinary-land carriage is rendering it difficult, if not impracticable, to farm land to a profit at a'greater distance from the port than that to which cultivation at present extends. 2. That the finest half of the province is rendered difficult of accss by two l«sge and difficult rivers, (he foakahia and Ran?iteta, which can only be bridged at a large cost. There are other reasons not now necessary to be entered upon which afford pood ground for believing that unless works of the above character are undertaken without delay, the profitable occupa- | tion of the soil will he checked, and the sales of land will fall off. The works which are contemplated, and have received the general approval of the Provincial Council are— 1. A railway from the present terminus -in Christchurch to Titnaru, a distance of 100 mila, and including bridges over the Bakaia and Eangitata. 2. A railway from the same terminus, northward to the Kowai, the northern boundary of the Canterbury plain, a distance of about 25 miles. 3 Important harbor works in Ljttslton and Tirnaru, for remedying the delay and exppnse which at present attend the landing and shipment of gonds at those places. „ v Th-; land required for the railways _ has bsen reserved from sale, excepting for a distance of ahout six miles on the southern, and 18 on the northern line. Anting upon the advice of_lrW. T. Doyne, an engineer ot considerable eminence, the Canterbury Government estimates the cost of the railways at an average of £8000 per mile for the southern line, and £10,000 for the northern line. The total expenditure on the whole of the above works, and on the completion of the Ljttclton Railway, is estimated at £1,400,000, such expenditure would be spread over a period of at least six years; no considerable sum would be required for six tnonth3 from the present time. Assuming that a capital of £1,400,000 is raised at a charge of six per cent, interest and one per cent. Hiking fund, the annual charges, 1 w'len the whole sum lias been expended will be ±98,00. Of course the whole of this sum will not have to be provided for until the works are completed . IV. - RETURNS FROM THE RAILWAYS AND HARBOR WORKS. . 1. The returns from the harbor works will consist of dock and wharfage charges. It is hardly practicable to form any accurate estimate of their exact amount. • 2. The returns from the railways, though less uncertain, must also to a great extent be con-, jectursd only. One source of income, however, can be arrived at with tolerable certainty, viz , the pro luce to be conveyed from, arid supplied to, the sheep and cattle stations. The value of wool ex"orf.ed from Canterbury in 1861 was L 195,000. In .863 it had increased to L 340.000. The numher of bales shipped last season was 18,363. In t.hre-> \ears from this time they will be at lea«t 30.0"0. On the completion of the mil ways, the i whole of the wool of the Province will be conveyed !by it, and at a very large reduction on the ! present rates of carriage will yield L 23.000. The return loads to the sations throughout the veav are generally taken fit an equal amount, but in the present estimate they are assumed to \ield only L 17.000, making a total for station traffic of L 40.000. By the time the railways are completed, and the whole amount of interest and sinking fund has become payable, the whole export will largely exceed that above staled. There is provided therefore — By two-fifth* of land revenue .... .... £70.000 „ returns for station traffic ... .. 40,000 ' _ £110,000 To meet a charge for interest and sinking fund of ... ... - .- £93,000 This will leave the whole of the pa senjrer traffic, and the conveyance of stock, agricultural produce, and other goods,—in fact, the whole of the goods traffic of the [provincs excep'ing ihat from the stations, as well as the returns from the harbor works, to be charged merely with the working expenses. It seems almost beyond question that were the cost of the whole contemplated works charged against the traffic which will exist in three years, the provisions proposed to be made for their cost would be more than sufficient. It is assumed that the traffic of the province ten years hence will make the contemplated works entirely self-supporting. It should be bor.-ie in mind that the-Canter-bury railways will be constructed under circumstances most favorable to profit. 1. The cost of acquiring land will be almost nominal. 2. The cost of construction, owing to the perfectly level character of the country to be traversed, will be small. 3. Owing to the same circumstances the cost of working will be low. The engines to be employed will be very light, and consequently the wear and tsar of the line will be very small. 4. Lyttleton being the shipping port for Canterbury, and for a considerable portion of Nelson, the whole of the exportable produce of that tract of country, and nearly the whole of its imports, must pass over the railway. 5. The most profitable part of the lines, viz., that within 25 miles on each side of Christchurch, will be undertaken first. V.—THE PRESENT APPLICATION OP THE PROVINCIAL GOVERNMENT OF CANTERBURY. Notwithstanding the evident advantages to b« derived from the works above mentioned, and the great necessity which exists for them, the Provincial Government finds itself unable to un» dertake them, because its debentures, in common with those of other Provinces of New Zealand, have become next to unsaleable in the London market The concurrent, testimony of the Agent of the Province, and other friends in London, and of information received from time to time through the various Banks, proves that this circumstance is owine not so much to a temporary scarcity of money as to the unsatisfactory nature of the security which alone the New Zealand Provinces can afford to their creditors, and to the refusal of the Committee of the Stock Exchange to allow Provincial loans to be quoted there. In the case of the Lytteltou and Ch.ristch.urch.

j Railway Loan, two-ihiids of which undertaking raay be said to be completed, the Union Bank of Australia has been unable to sell any debentures in ihe market, out of L 100,00 J worth entrusted to it, and 1m got rid of only L3O/00, to parsons connected or conversant with the colony. At the same time that tirs loan would not sell, a loan for the colony of Queensland was disposed of b* the same Bank, witnout any difficulty, and on very fivorable terms. Unless, therefore, the General Government f els itself justified in assisting the Provincial Government to undertake, Iby anticipation, of iis revenue, sncli important I pab'ic works as can only be executed by that means, and have now beconift indispensable to the development of the provincial resources, there seems little doubt that the colonization and the progress of tho Province will receive a serious I and lamentable check. I The Provincial Government suggests that as- | sisfance may he given either— !1. By a gu '-rantee on the parfc of the General i Assemlly, of the Provincial loans already authorised, and of such further loaus as may complete ihe sum of 1,1,500,000; or 12. By loans being raised on the credit of the } colony to such amount as may appear justifiable I for the execution of specific public works within ths Province. : In either case, all necessary conditions being imposed for the proper application of tbeamounts raised, and for the punctual payment of the interest and sinking fund out of the Provincial revenue. The second alternative appears the more desirable one, because it is probable that under any circumstances a Colonial Join would sell on better | terms than a Provincial loan ; and also, because under this plan it might probably be practicable to make arrangements under which the Province would draw from the Colonial Treasury from time to time, such sums only as it actually required. A. third alternative lias been suggested, viz., for the General Assembly to transfer by law to the several Provinces the control of their territorial revenues, subject to existing charges. The Provincial G-overament doss not recommend this proposal for adoption. The request of the Provincial Government of Canterbury is, that his Excellency's Ministers will undertake to piopose to the Gen^ralAssembly at its next sitting1, as a Government measure, a Bill for giving ■effect to .one: of the two proposals first above mentioned. (Signed)1 John Hall, Secretary Tor Public Works. Canterbury. 26th July, i 864. Letter from the Colonial Secretary to his Honor the Superintendent xv Canterbury. . • ■ •.. Colonial Secretary's Office, Auckland, 27th July, 1864. Sir—l hnve the honor to acknowledge the receipt of your letter of the 9th inst., on the subject of the Canterbury loans, in which your H<i"or introduces Mr Hall. I have received also from Mr Hall a memorandum " On the existing financial condition of the Province of Canterbury,'and the works proposed to be undertaken by the Government of that provioce," in which he points out that the debentures issued undsr the Ordinances of the Provincial Legislature have bacome next to unsaleable in the Lindou market; a fact which upon che authority of the agent of the province, and oi-her persons in London, and of information received through the Banks, he attributes "not 80 much to a temporary scarcity of money, as to the unsatisfactory nature of the security, and to the refusal of the Committee of the Stock Exchange to allow Provincial loans to be quoted there." . Mr ball states that ''the Provincial Government suggests that assistance may be given either— ■ , „ 1. By the guarantee on the part of the General •Assembly of the'Proviricial loans already authorised, and of such further loans as may complete the sum of Ll,500,000; or , 2. By loans being raised on the ere lit of tlae ( colony to such an amount as may appear justifiable for the execution of specific public works within the Province." r " The request of the Provincial Government of Canterbury is, that his Excplleney's Ministers will undertake to propose to the General Assembly at its next sitting, as a Government measure, a Bill for giving eifect^to one of the proposals above mentioned.'' . The General Government have for some time past felt it necessary to give special attention to the subject of Provincial loans; and the present application of the Provincial Government of Canterbury, and one of a simvar nature from the Superintendent of Ofcago. have rendered it necessary that some course of ■action should he determined on by this Government. Ttis obvious that, in making any provision for the fnture, the position of creditors who have advanced the money already raisel) in the different Provinces must not be overlooked. The question as t-> how far the Government of the Colony is liable legally, equitably, or morally, on the security to creditors for money borrowed by the New Zealand Provinces, has often been discussed, and during the last session of the Assembly a select committee of the Hou-e of Representatives was appointed, to whom the subject of Provincial loans generally was referred. No satisfactory result was attained by this committee, which made no report upon the general question referred to them, but amongst other points which *hey considered, they appear to have give a especial attention to the question of liability above referred to. The proceedings of this committee, with other established facts, strongly impressed the Government that it had become necessary for. the Assembly to deal with the question in a c-mprehensive manner at an early period, and although too late in the session when the committee had concluded its labors for any further steps-, it was obvious that some legislation would be required in the following session events have entirely confirmed this view. It appears to this Government that whatever may be the actual liability of the colony in re- . spsfit of provincial loans, a very strong _ fueling exists especially in England that at least it is the duty of the General Government to see that the money b'rrowed with its sanction under -Acts or Ordinances assented to by the Governor is renait, and the engagements as respects interest and sinking fund, fulfiDei. I do not propose to discuss the question as to how far creditors, having regard to the security they have accepted, can reasonably entertain expectations that the revenues of the colony, in no way pledg-d to them, should be considered liable for the engagements contracted with them, but I j must admit the fact that many of them, in common with a considerate portion of the public at large, do entertain such expectation. It is therefore, a question, setting aside other considerations, whether the General Assembly should net as a matter of policy take entirely under its own control the raising of loans on the security of the public revenues and property, and there can be no doubt that it is of importance to ths credit of the colony generally that the credit of the Provinces, should not be damaged in their money borrowing trail" actions. This Government is also rea-iy freely to _ acknowledge that having regard to the liabilities which the Southern Provinces are readily incurring for objects mare particularly affecting the Northern Island, they establish a substantial claim to any a=s;stance which can ba pruiently ren-lered by afforJing them the use of the credit of the colony, to raise money for great public objects, which could not be otherwise obtained only at a seriously enhanced cost. The impossibility of negotiating the Provincial loans which ! have been authorised by the Provincial Legia- ! latures of Canterbury and Otago, of ''ourse presses this portion of ths subject strongly on the consideration of the General Government. In short, this Government is clearly of opinion that it is the interest, both of the colony at la-ge and of the Provinces, that the power to borrow money should be confined to the General Assembly, or at all events that no borrowing should be permitted without its consent, and that the credit of the colony should be pledged for such money as the General Assembly consent should be raised for the use of the several Provinces, so as to enable them to obtain it at a lower cost. For the purpose of giving effect to these views, the Government will be prepared to propose a Bill in the next General Assembly. 1. To guarantee on behalf of the colony the loans which have already been authorised by Act or Ordinance of the Provincial Legislature, assented to by the General Government. 2. To prevent Provincial Legislatures from passing Loan Acts for the future, so that money to be raised on the credit of the public revenue and property shall only be borrowed linger the sanction of an Act of the General Assembly.. This arrangement; will give to the several provinces the beuefifc °f c colonial credit for

raising the greater part of the money already authorised by Ac's heretofore passed. With regard to Canterbury it appears from Mr Hall's statement that the total amount actually raised by loan in that province to the Ist of April last, is only one hundred and thirty thousand pounds, leaving a large sum already authorised to be raised on tin credit ot the colony, if the General Assembly coincides in the views of the Government and grants the proposed guarantee. With regard to any further suras which it may be found prudent and desirable to raise in order to carry out the works contemplated by the Province of Canterbury, and detailed in Mr Hall's memorandum, that, will he a question for the General .', ssembly; but I will only a<ld, on the part of this Government, that although it cannot concur in every thing that,Mr Hall advances, it is ready t> art rait that ai strong case is made out in favour of further assistance. I have the honor to be. Sir, Your most obedient servant, (Signed) William Fox. His Honor the Superintendent, Christchurch.