POLITICAL FINANCIERS

Otautau Standard and Wallace County Chronicle, Volume IX, Issue 427, 15 July 1913, Page 2

POLITICAL FINANCIERS

LOANS COMPARED. WAS MR ALLEN'S A COUP? WELLINGTON, July 8. Special interest was shown by members bf the House of Representatives this afternoon, when Mr A. M. Myers, ex-Minister of Finance, referred to the recent loan raised by his successor, the Hon. Jas. Allen. He first of all referred to the iloating of the 4£ million loan which hs raised when m oifice. At that time, he said, it was impossible to float a stock loan on anything like reasonable terms. Money had to be found at once, either by conversion, which he did not consider advisable, or by floating a loan. He was fortunate m being able to float a 4^ million loan for a short period, so as to enable them to provide for payment of existing loans and provide £600,000 for public works. He was not m favor of short-dated loans, but when terms were high he was m favor of borrowing by means of short-dated loans. He would be glad if the Government would lay on the table a j return showing an average cost of loans for the past 21 years. As to the loan raised by the Hon. J. AMen, he said they had to deal with the estimated cost. No statement had been made as to the allocation of the loan. Hon. J. Allen : I will lay it on the table to-morrow. Mr Myers went on to say that it was quite clear that the Minister had not obtained the same advantageous terms as wave obtained by other countries. New South Wales had raised three millions at 99£ for the same term of years as the New Zealand loan. Tasmania had obtained a loan of £1,300,000 4 per cent, inscribed stock at 99. In January last Queensland xaised £2,000,000 inscribed stock at 99. On sth April South Australia floated a loan of four millions at 98. Hon. J. Allen: Where is it now? Mr Myers : South Australia has the money. Hon. J. Allen : Or have the underwriters ? | Mr Myers: The underwriters ; are very j shrewd men. After the rate of interest had gone up they very gladly said to the Government of New Zealand "We'll give you another £600,000." The Minister had made out that he had- effected a financial coup. There was no doubt that he had done his best, but how did it affect the people of New Zealand? The Prime Minister referred to the loan raised by him (Mr Myers) as costing 5 per cent., whereas it was £5 2s 9d per cent. The figures furnished him by the Treasury stated that the cost of his loan for two years amounted to £4 18s 9_d, or a gain m 30 years of £270,000, as against the loan raised by the Hon. J. Allen. Then they had the Alinister of Finance expressing the hope that m future our loans would be floated at 5£ or 3f per cent. Hon. J. Allen : I hope so. Mr Myers said he believed the Minister was correct, because all those who had read important publications dealing with finance would see that events were tending m that direction, and as soon as the European situation cleared up we would have much cheaper money. If the old Government's loan was floated at 94, with the double cOst of flotation expenses, it would work out at 4 per cent., which, compared with the cost of the three million loan first raised at £5 6s per cent. , would mean a saving to the Dominion of half a million. The credit of the Dominion was hot depreciating. Touching on the ' — Present Financial Position — of the Government, Mr Myers said there was no indication on the part of the Government to reduce their expenditure and to redeem the promises that they had made before coming into office, seeing that within the past 12 months, the ratio of expenditure to revenue had gone up Dy _ per cent. As to sinking funds, he was glad to find that the Government had changed their opinion. They had evidently come to the opinion that sinking funds for general purposes were .useless. It was evident that the Minister of Finance did not intend to collar sinking funds, and he was glad to hear <t. — Liberal Surpluses. — Mr Myers proceeded to refer to surpluses. The Prime Minister had announced that there had been a genuine surplus,, and yet the Minister of Finance had stated m his loan prospectus that since 1891 the Government had transferred £8,500,000 from the Consolidated Fund to the Public Works Fund, and that all that money had been used m the opening up of the public estate. Mr Allen had also stated m his prospectus that 67.1 per cent, of the Public Debt was interest-bearing, and that the actual interest paid per head of the population had considerably decreased. The speaker next referred to loans to local bodies, and said that if the Massey Government had raised the rate of interest from 3_ to 3| per cent, m the Post Office to depositors under £200 10 months previously to the time they did they M-ouJd have had more money at their command. Hon. J. Allen: When did the slump begin? Mr Wilford: When you went m. Mr Myers said the Government went m on a splendid financial wicket — with a genuine surplus of £800,000, which enabled them to transfer £750,000 to the Public Works Fund. All the loans maturing during the present year totalled £1,770,700. Hon. J. Allen: How about next year? | Mr Myers: About £8,000,000. I'm I afraid I shall have to arrange for those I myself. (Loud laughter.)