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Southland Times, Issue 4496, 7 December 1882, Page 4

With a_graye seriousness that deeply; im* prcßfl^ittosc;w^o L did not knovvithe speaker,^ ne unfolded a scheme for the conversion of the loans iaiscd at different periods into one consolidated stock. ' 1 am sanguine,' he said, ' that 'cut the average -the debentures in- the hßuttt^EfpriYatfßi holders at 3lame\CQul<l be brought up at £I.os,<.oiVfiv« per sent, above par.' Starting from this premises Mr McDonald bnUfcup'SHwfr:^ ania-: verted pyramid. ,>Hei d*ew,tfor; the delecta« tion of his headers, a pretty financial picture, the filling in of which; may be briely summarised,^ .^oujow^ £80,ppChnqw ; yea are paying £fß^jVp^^}anhaiii interest, with £660 interest "on overdraft. Now, if yon can borrow £100,000 at five" per cent, you can pay. off that £80,000, and, deducting incidental expeni«L>(tc.,,haTe ,£9 W or £$000 to spend* on' publ^work^andyet have fco pay less in- ~ terWt'than atjp^eaent by-i £3RO a-y'eari 1 , , As- . suming-llr McDonald to have spoken in good faith,, one cannot but admire his, childish aimplicity—his! dense ignorance of the first principles of , finance, „ He takes for. granted .that the bolder! of Corporation debentures will sell them back at £105/ Now some of these debentures, bearing six, per, cent, interest, were 'fold/ s as A -iow 1 s» :l £'85; Let it be supposed, , .for. , the, argument's sake, that f4 tnV l noloer !^i 'one o* /these is ' ihdnced to tell it back ' to the Corporation for £105.. He wiahes ,to~reanvest, his money., Ttc ataon »»y« i— * Bay on'e^of btirfire' per- cehl consolidated debentures at £102.' He^doeVidV keeping in his pocket the £3 of apparent prr fit. Bat What has happened ? He Jioldsna- security that yields him only £5 a-x«*t:jnstjMd;pf' £6, so thafcat the i end of thelhirdyearhe hailost his £3 of apparent profit.' jiHence ijt;,:is-;evident that to place the hoidera pf .the present debentures on as good a i footing" asV,tiiey now are, it wonld be necessary to.girethem £120 for every £100 scrip, that being the amount required to yield £d per annnm. , , If the debentures could not be bought up at £ lees price than £120— and it is quite possible that the holders would want more— the finwciftl operation of con. version wpnld absorb the wbol« of the difference between, £Bo,ooo and £100,000, the only advantage gained ; being the greater facility of dealing with the debt of the town in the matter of payment, of interest. The whole of Mr Me Donald's calculations of gain are absolutely worthless, although they have served to impress the untbiDkint; with an idea of his profound financial ability. He has, in fact, been trying to construct a mayor's nest for himself,, and has not been •ver particular in his choice of materials. To discuss rationally the above qaetions trith the- News would be the height of madness, until it has arrived at some fixity of opinion. Its utterances of the 29th altimo confront and contradict unmistakably its enunciations of too 7th September, 1881. As to whether its contrarieties and incongruities are attribatablo to atmospheric influences, or to some other disturbing element, I shall not pause to consider, but certain it is, that its volatility is strangely remarkable. Apparently tho News has descended to a stato of journalistic depravity, in which it fully believes tbjit its votaries will greedily swallow any nostrum that it may propound, so long as the Joycey compound is dished up with a certain quantity of savory abuse, to give it relish. I ask your readers to read the editorial of the Newa of the 7th September, 1881, and judge for themselves of th« value of its comments of the 29th ultimo. "I am, &c, J. L. McDonald. luyercargill, -ith December, 1382.