Hie Harbor Sinking Fund

Poverty Bay Herald, Volume XVII, Issue 5758, 2 May 1890, Page 2

Hie Harbor Sinking Fund

Sir, — Although I should derive some advantage by the use you suggest the Harbor Board should be allowed to make of its Sinking Fund, I am sorry to say there is no analogy at all between Sir J. Vogel's financial scheme and that which you suggest. The Sinking Fund seized by Sir Julius was only in theory a fund at all. Sir W. Fitzherbert when he raised the Consolidated Loan, which embraced all the Provincial and most of the then existing colonial ones, brought it out as a " one per cent, cumulative" Sinking Fund. This would appear to outsiders to mean that one per cent, was invested in securities to redeem the loan at a future time. In fact, however, nothing of the sort took place. What occurred was that debentures to the amount of one per cent, on the original loas were drawn . by lot and paid off at liar, and cancelled. To this »ne per cent. , which remained always for 40 years at the same amount, was added the interest of the cancelled bonds, so that the colony paid 6 per cent, on the total loan from the first to the forty-first year when the debt was paid off.

What Sir J. Yogel did was to raise another loan to buy up tae debentures of Sir W. Fitzherbert's loan, and so escape the obligations of the one per cent, cumulative. As money was cheaper in Sir Julius' time, and the new debentures are not liable to a " draw " we pay less interest, and our consols are not prejudiced by the risk of being paid off at par. This risk of course kept down the market price of the stock, as people were afraid to buy at a premium— an argument constantly used to justify the " operation. " Certain Provincial loans could not be entirely bought up, and some of their debentures are still existent. Their sinking funds are religiously protected by the trustees, and no one ever proposed to interfere with them. You will note that the case of those fragments of loans is precisely that of. our Harbor Board debentures, and unless there is any reason to hope that our Board could buy up the present loan by means of another at a lower rate of interest and other conditions we shall not be able to profit by Sir J. Vogel's precedent. I wish we could. I think it is no use repining now our rate has to be borne, and if we can promote settlement throughout the district it will not be so irksome, because there will be more shoulders to bear the load, and all classes will be better off and more able to spare the money.— l am, &c.

G. S. Whitmore,