CRITICISM BY FINANCIERS.

Poverty Bay Herald, Volume XXXIX, Issue 12789, 14 June 1912, Page 2

CRITICISM BY FINANCIERS.

(Special to the Herald.) DUNEDIN, this day. Inquiries m financial circles m Dunedin to-day revealed the fact that not a very pleasant feeling of surprise was occasioned by the news that 87 per cent, of the issue was left m the hands of the underwriters. Some of those who were spoken to also expressed annoyance at the course of action pursued m regard to the/flotation, both by this Government and- their predecessors* Without exception there was a diverse criticism of the whole system of shortdated debenture "issues; of which this last is regarded as"' a- particularly had example. The only exonerating critic was a gentleman who pointed but. -that of the. Indian 3A '"pier cent, loan issue m April 87 per cent. :of the total of £3,000,000. was. left m. the jhands of the underwriters. The issue was offered at £93, at which, the yield to the investor is i r about : , 3| per ; cent., the loan, being not redeemable before -'.January 5, 1931', and after that" date only Vat' the option of the Indian Government. He added that . two reasons for the unfavorable result suggested by the Saturday Review were the . absence of investments demanded from quarters affected by the Titanic disaster, and the desire of the ordinary investing public for an interest yield of, at. least 4 per cent.,, even, when security is absolutely sound. Thus -he was able to ,slio\v that New Zealand's present . unfavorable experience '.oft-, the London' money 'market is not without parallel, especially as Indian stocks are regarded as ; first-class securities, quite as good 1 as New Zealand.;A leading 'financier of this: towii said right away tliat it was the worst, thing that could happen t,o the credit, of the Dominion's .""finances.. '"The very high opinion held ot New ZealanaV7}tt financial circles at 'Home must be shaken considerably, from the fact that New Zealand is borrowing this, four million on the short - ! datted "ternV 6f two years. It strikes me that -it is merely a temporary filling up of a gap. It is very unfortunate that such a matter of finance should-, be # compulsory, for this manner of financing loan ihust be compulsory." ■', 'lt is a : bad day; iov' the.Dominion that it . should tie, n'eeesfeary to finance our loans m such art unbusiness^ like manner.' Tlie. fact is we are borrowing, money toVpay our interest on capital again. I say this manner of financing loans t sliows . a, weakness m our, finances."' ".'.'. Another financier' said that m his opinion he did not think that it' showed that there, was "anything wrong with the finances of the country. "I think the Government hafre just got m a tight corner. It seems to show that thei;e Ir i- r a shortage ;of money, and t*iat [there has been;' laxity m some way m arranging ,the' finances. Now the'(government find Ihey iite short 1 of money ; they find themselves m a hole, and must ; do their best to get out,,,pf ...it; They , have t& get money,' irr_kpectiv6 of what; itVcbsts. From what I haVe read I don't see how one; 'can tell what 'the loan is going, to cost. ! This one, however, seems to be' going to cost more than usual. 7 I would :,nqt> ,say y that it shows weakness m. the . finances of, . the country, but of course we know very little about the 'whole ,thlhg. It seems 'that with the change of Government provision was not made for. liabilities and payments as they fell due, and now they have,, awakened up to .the, fact that they want money .''' There is a' tightness at present m the 'Phoney market. The fact that the-ba^s. have .increased, their deposit rates "is STfS^fndeht,, indication money is not so flush as it might "be- ,At the: same time 1,, don't think it will last, I think when the season's results are turned into cash matters will become ' normal .again. >'-■ So> far as I can see th> people; 7M'.N.eW;7Zeiot^and are inclined to be a^ittie too; extravagant,' and that with r the over-importation that is going on Js the cause of ( 7.the whole tning." ■£-. . "V ; ■"' ■'"'' ' A well-known merchant said that .the. floating of suph a large 'sum for 'two: years 'showed^" his "opinion, a distinct* weakness' in our financed They had it from the' Prime. Minister that the loan was to be used for repaying loans that' had become ' dueJ ! If that was : so, then one could understand s.omc temporary' arrangement being made, but if it was an ordinary loan, as it probably was, then it' showed a decided weakness. He did •'not think there was any doubt but that money must become tighter. He thought they would find rates higher m. a very short 7tune. " ■ . v, . ■ .-; ..,.,*• .