NEW ZEALAND'S CREDIT.

Otago Witness, Issue 2205, 4 June 1896, Page 55

NEW ZEALAND'S CREDIT.

COLONIAL TREASURER AND AGENT-GENERAL. (From Our Ovrs Correspondent.) London, April 18. Once more New Zealand's credit; and good faith are being bitterly assailed in London. Certainly it is very unlucky that Mr Ward's utterances while he was in London should have been involved in so much ambiguity of circumBtanoe and should huve required go many subsequent explanations. English people generally are like ordinary juror*. They »lw»ys prefer what appears a plain face to an elaborate explanation. In this case Mr Ward's statements seemed plain enough, bub now people find, or imagine," that they meant or were intended to mean Something quite different;, or that their ostensible meaning was not supported by later disclosures, and so they are resentful. This resentment is constantly cropping up, and Mr W. P. Reeves is likely to have hi« ban 3 s full in calmiDg-the troubled waters of Ne v Zealand's London credit. He has been prompt in dealing with ths case in poiLt. , One day last week the Financial News Opened fire. It bpgan in a most agreeable ! strain of delusive compliment under the beading " New Zealand and Her Credit " as follows :—: — •' It is unfortunate that a colony like New Zealand, towards which we at home entertain the moot friendly feeling?, should allow herself to enter on a policy of apparently deliberate disregard for the natural susceptibilities of investors in her undertaking*. Ouly a year or two ago New Zealand earned the bigaeofc encomium* for the nolf-deuial with which she Set herself to redress an unfavourable financial situation. Loans were abandoned,., new taxes were levied, and every endeavour was made to create a permanent equilibrium between revenue and exper diture. These efforts} fortunately successful, were observed here with the liveliest eatii-fuctiop, and many were the contrasts flattering to New Zealand drawn between her and the neighbeuring Australian colonies, which had not then seen the necessity for seeking financial salvation." Awfully nice and kind, you see. Bat, alas ! too soon the strain charges. Like-this : — " It would almost appear as though New Zealand had set herself steadily to destroy the unpleasant impression created by the reformation in her internal finances. Not one bnt several instances of bed faith towards the English creditors of the colony have recently occurred!; and in each case the Government itself, and no, come small municipality or harbour corporation baa been the culprit. Mr Ward, the present Colonial Treasurer, has earned an unenviable reputation in this country as a politician whose word is not quite bo trustwoithy as it. should be. It was a little awkward that elter his wellremembered visit to London the succeeding Budget of the colony should have revealed a position somewhat different from that pictured by him ; bnt that wag not the Eolitary offence of which he was guilty." In the opinion of the Financial News Mr Walter Busby, a well-known member of the Stock Exchange, who is vice-president of the New Plymouth Harbour Committee of the Couucil of Foreign Bondholders, brings home to Mr Ward a chargo of very serious misrepresentation. What is stated is that when the torospeots of the 1895 New Zealand loan were' likely to be compromised on the opposition of the New Plymouth harbour bondholders, Mr Ward and the Agent-general met some members of the committee, and promised that the claim to the 200,000 acres of laud should be submitted to arbitration. Mr Busby reminded the Treasurer that this request had been frequently refused, and asked why Mr Ward thought it would now be more favourably received. The Treasurer's explanation waa that previous proposals for •roil ration had emanated from the Opposition, and so received scant consideration. Tho> financial News admits that Mr Ward did not promise that the Government would agree at once to arbitrate ; but only was " pretty confident his recommendation would carry weight enongh to ensure favourable response." Now I cannot help thinking that a misapprehension has been created in this respect by Mr Ward's ple&sant and gsnial manner, which may have given to his words the appearance of'pronising more than was conveyed by their literal sense. I met Mr Ward directly after the interview and received from him personally a very full account. In fact we talkeU over the matter at great length, and I even read his notes. If my memory do not play me false, what Mr Ward said was tbafc he had promised the bondholders to bring before his colh'Bjucs the claim relative to those 200 000 acres and to have the question fully discussed in Cabinet, but that he had distinctly explained his inability to bind the Government by any pledge of hie own. But now it is asserted that while these negotiations were in progress between Mr Busby's committee and Mr Ward, the latter was in possession of a cable 'message from the Premier containing a distinct refusal to allow, on behalf of the Government of the colony, any reference to arbitration in respect of a grievance of the holders of the debentures, who acquired them with the distinct -statement on- their face that the colony had no liability in connection with them. Here, however, occurs a curious Contradiction. In the next sentence it is stated : •' The words quoted are from a letter written by the Premier himself, and the date shows that Mr Ward had the refusal in his pocket when be was assuring Mr Busby that arbitration would be assented to." If the words were from a " letter " how conld they have been conveyed in a *• cable message" ? And, further, it i« admitted by the same writer only a few lines before that Mr Ward did not "asture Mr Busby that arbitration would be assented to." This is a very glaring discn paney. Bin»lly the News asserts that "the threatened opposition to the loan of last year was withdrawn en the strength o£ Mr Ward's promise." And it deduceß the following moral, which is in the highest degree defamatory of New Zealand's good faith : •' No doubt it was clever to secare the_ success .of the loan issue; but awch smartness is not appreciated in this country. Mr Busby has taken care to have the story published both at home' and in the colony, and we ■hould fancy it will be long ere English investors are willing to accept the unsupported word of a New Zealand politician again. Taken in conjunction with the bad faith shown in connection with the New Zealand Midland railway, where the colonial Government has exhibited equal indifference to its own promises and to the interests of English investors, the incident chronicled by Mr Busby may turn out very nnpleaaaut for the next Now Zealand Treasurer Who attempts to borrow money in London." To this rather nasty attack the Agent-general replied as follows :— •• In your leading article of April 7, on ' New Zealand and Her Credit, 7 yon make a somewhat severe attack, condemning specifically and at the same time both the Treasurer of the colony and the colony itself. !fou charge Mr Ward with bad faith and New Zealand with entering on ' a policy of delibe*

ra*c disregard for the natural susceptibilities i of investors In her undertakings'; a'so with i • setting herself steadily to destroy the pleasant impression created hy the reformation in her internal finances.' As the good name of New Zealand has thus been impugned, you will not, I am sure, object to my suggesting to your raaders that they should, at least, suspend their judgment until they have read such answers as Mr Ward and the Premier may make to the attack on which your article is based. To show how advisable such suspension may be let me point out that the question of referring the New Plymouth matter to arbitration Was not finally discussed and settled by Mr Ward and his colleagues until after that gentleman's return to the colony. I have just been reminded o.f this by Mr Seddon himself, and, as a then colleague of Mr Ward's, I am in a position to say that my recollection confirms his reminder. I would therefore ask your readers not hastily to jump to the conclusion that an} thing was done which ought, as you seem to hint, to prejudice New Zealand's chances should she at any tini-i need to use her credit here.*— l have, &c, W, P. Reeves, Agentgeneral for New Zealand." It will be observed that Mr ' Beeves has dealt with the cage in studiously moderate and temperate language, dimply appealing to the British sense of fa ; r pl*y for a suspension of judgment until the other fide shall have been heard. Not only in my own opinion, but in th« view of all who are best able to estimate •' city " feeling, Mr Reeves has adopted a wise and prudent course. That this latest attack has not materially damaged New Zealand's credit may be inferred from the fact that the day after it appeared New Zealand 3 per cents, went up to par, and they have since risen to 100£. So you may breathe yet! But nest appeared on the bsit'efield Mr H. W. Snow, who suggested that Mr Ward should "Crack all his nuts at once," and that he should explain as early as possible bis subsequent action with regard to the Bank of New Zealand in face of the replies he gave to the committee of the bank's shareholders at a meeting held at the bank on April 2, 1895. The following are the points presented by Mr Snow for Mr Ward's elucidation :—": — " (I) Mr Ward stated the Government had no intention to amalgamate any other bank with the Bank of New Zealand, and, in fact, he strenuously opposed aoy such arrangement. (2) On it being pointed out to Mr Word that the fflobo assets held by the Bank of New Zealand Estates Company were specifically protected by the bill passed in 1894 from any interference, and should be held as an estate in liquidation, and valued in the bank's balance sheets at the amount then standing in the bank's books for the period of 10 years, he concurred in this, and farther stated ' that the Government would not cause any interference with these assets, but treat them as provided for in tha bill passed. (3) Mr Ward stated it was not the intention of the Government to recommend the directors to call up any J further portion of reserve capital, as it would not be necessary. (4) Mr Ward promised that every information should be forwarded to the London offioe of all intended new proposals and full particulars of meetings directly after they had been held, so that shareholders should at once be in possession of what was their due, and allay any doubt as to the Government's intentions." Whereas, says Mr Snow, "the course adopted by Mr Ward directly on hie return appears to have been in direct opposition to these promises. Without any sanction or advice from the bank's shareholders here, the Colonial Bank was amalgamated with the Bank of New Zealand. A commission was set on foot by the Government to inquire into the position of the fflobo assets, and to what appears to the shareholders (judging from the information afforded by the London board), the values of these assets were reduced to a ridiculously low figure, with the result of writing off the whole of the shareholders' capital and the special call of £3 6s 8d per share of the reserve capital paid in 1895, and a further call of £3 6s 8d per share was again made (to be, I fear, only again written off when it shall please the Government) ; and although a meeting of the bank's shareholders was held in Wellington in February last, not a word of information has' been forwarded to the London office as .to tbe result of such meeting, or explanation for tacking on the liabilities of the Colonial Bank to this already over- weighted and discredited corporation." Wheretore Mr Snow expressed the hope "that Mr Beeves will deem it also in the the interests of the colony's creditors to obtain for the ill-used and befooled shareholders of the Bauk of New Zealand straightforward answers from the Colonial Treasurer as to the marked difference between his April promises and July actions in this notable piece of haute finance." Mr J. A. Keltnan is the next assailant of hapless New Zealand. He says that even if it be necessary for tbe public to suspend their judgment on the New Ph mouth H&rbour Board question "no such necessity exists on the j subject of the action of the New Zetland Government" towards the New Zealand Midland Railway Company. This company, continued Mr Kelman, spent about £1,000,000 sterling in constructing a much wanted line of railway, ,and, after being harassed by the Government in every shape and form to such an extent as to render the carrying out- of the contract almost impossible, the Government has now confiscated the railway and the property of the company on the ground that the contract has been broken, The capital of the English investor has, unfortunately, too often met with difficulties in" connection with the obligations of semi-civilised and bankrupt republics ; and yet I question whether in the history of any euch counTry a more barefaced act of confiscation could be pointed out." Mr Kelman proceeds to observe, with reference to surprise having been expressed that the public had taken so little notice of the action of the New Zealand Government in the matter of the New Zetland Railway Company, "In my opinion that fact but illustrates the proverb • Still waters run deep.' The shareholders and debenture-holders o£ the company are not the ordinary class of small investors, who, at first noisy and indignant over their wrongs, sink ultimately into silent submission, but are composed of the leading bankers and merchants in London and the provinces, who, aa was stated by the chairman of the company before he left for New Zealand, went into this investment not as a speculation, but in the belief that it was a colonial security of the first class. I have had long experience, and consider myself quite competent to feel the fiuancial pulse of the investing public, and from what I know of the present silent undercurrent of opinion towards New Zealand securities, I give it as my impression that the word has already gone forth : No more money for New Zealand until justice has been done to the New Zealand Midlaod railway."

To which the answer is that since these etters have appeared New Zealand securities have rapidly and steadily gone up ; so much for the practical effect of this sort of criticiim.

Further, a group of correspondents, signing themselves " Once Bifc, Twice Shy," write thuswiae : — " We certainly think that New Zealand has laid herself open to the charges brought agaiusb her. There is, we think, no question as to the disposition to take advantage of, if not to break faith witb, investor*, if it can only be done with impunity. Holders interested are not likely to forget the unpardonable deduction of New Zealand income tax from the coupons of the debentures of the Wellington and Manawatn railway, at a rate amounting to 16s 8d per cent, per annum, which took place in 1893, but which the Government found it prudent not to continue in face of the storm of indignation and disgust which it aroused. Is Mr Reeves's letter to be taken as an indication that a new loan will shortly be required ? One is almost led to think ao." The Financial Times, however, nss the following amende :—": — " With regard to the question of the Nisw Plymouth Harbour Board bondholder?, to which we referred in our last Wednesday's issue, th« 3 .Agent-general for New Zealand, in response to our suggestion that some explanation was desirable with reference to the statement made in the Press (of Christchurch, New Zealand), attributing a breach of faith on the part of Mr Ward, the New Zealand Colonial Treasurer, has informed us that he holds a letter from the Hon. Me Seddon, the Premier of New Zealand, written in February Ust, in which ho poin^ oub that, bo far from the question as to arbitration having been decided whilo Mr Ward was in London last year, it was not finally discussed and settled by the Cabinet until after Mr Ward's return to New Zealand. We are pleased to publish the Agent-general's statement, and while doing so may take the opportunity to explain that his failure to keep aa appointment with oar representative, as we stated on Thursday, was due to unforeseen circumstances."

Mr T. W. M'Eenzie, who has been a member of the Loyal Britannia Lodge of the Manchester Unity of Oddfellows for about 53 years, was presented at Wellington on Friday with »n illuminated address in recognition of h>s services over a period of 47 years as trustee of the lodge, a position which he has just resigned owing to ill health. A deputation from the Invercargill Boiough Council waited en the Hon. J. G. Ward on Thursday to urge upon the Government the nece?sity for "reestablishing" railway workahips in Invercargill. The mayor stated that 30 men were employed here on general repairs, as against 150 in Dunedin, and beat lamps, lamp glasses, &c, were imported from Danedio, this being an injustice to local retailers. Ib was urged that the mileage or lines in Southland entitled the j district to consideration in the matter of repairs. | Mr Ward said he would be glad to convey the deputation's representations to the Minister for llailways, and he would co-operate with members for the district to get justice done to it in this matter.