THE COLONIST. PUBLISHED EVERY MORNING. MONDAY, JUNE 23, 1913. LIBERAL AND REFORM FINANCE.

Colonist, Volume LV, Issue 13756, 23 June 1913, Page 4

THE COLONIST. PUBLISHED EVERY MORNING. MONDAY, JUNE 23, 1913. LIBERAL AND REFORM FINANCE.

We havo heard so much since the return of the Minister of Finance from London in the shape of criticism of the financial policy of the previous Governments, and particularly of the shortdated issue of the Mackenzie Administration, that a presentment of the other side of the case made by Mr A. M. Myers, member for Auckland West, in an address to his constituents last week, is very opportune. Mr Myers was Minister of Finance in Mr Mackenzie's Cabinet, and one of his first duties as the holder of that portfolio was the floating of the £4,500,000 loan, which he did at 3£ per cent at 99. The main objective of the hostile criticism which has been levelled at this operation is the short date of two years, but the critics overlook or minimise several facts which had an important bearing on all loans raised at that time a»d necessitated a short date. A financial stringency prevailed in London, and it was impossible for a long dated stock loan to be placed on the market on anything like reasonable terms. In addition to this fact, Mr Myers pointed out yet again, that, owing to the uncertainty of tho political situation, his predecessor considered it his clear duty to leave the then Opposition quite free, in tho event of their accession to power, to fix the amount and terms of tho loan, and that consequently only temporary arrangements had been made to carry on the public works and land settlement policy of the Government, and also to redeem maturing loans to the amount of £2,840,500. A balance of about £3,000,000 of tho five million loan of 1910 was still unconverted, and in the next place, to meet the amount of money temporarily borrowed by Mr. Myers' predecessor money had to bo obtained at once, irrespective of the condition of the markot, either by a continuation of tho temporary arrangements, or by floating a loan, which Mr Myers deemed tho preferable course to adopt. Tho Prime Minister has stated that the cost of the Mackenzie loan for the two .years worked out at £5 2s 9d per cent, against £4 5s 6d for the latest loan. Mr Myers. pointed out, however, that, according to the figures supplied to him by the Treasury, when the £4,500,000 loan was floated, the interest cost as £3 12s per cent, and the total cost for tho two years, including all charges, was £4 18s 9£d per annum. On maturity of the loan there was every prospect that it would bo converted into a 3£^ per cent long-dated stock loan at, say, 94. If these terms were secured, the average annual cost of the loan for the whole poriod (including the higher cost for the first two years) would work out at £4 per cent, as against £4 5s 6d for the present Government's loan. Al-, lowing for compound interest, there would he a total saving for the 30 years of something like £685,459. Tho Prime Minister confines himself, to the immediate cost of the £4,500,000 loan, and said nothing about the. ultimate cost, which could only bo ascertained when the loan fell to bo renewed next year. |.Mr Myers said he believed • that time, would justify his action in floating a short-dated loan last June, and in support of this view' he quoted the-opinion expressed in Wellington recently by the presont Minister of Finance (Mr Allen), who stated: "The day is not far distant when we can get back to the old days of 3J per cent or 3£ per cent, and raise our loans on very much better terms than we raised oiir 3&-per cent loans in the old days.", The highest financial authorities in London all predicted that money would become ..much cheaper whenever the -Balkan trouble was settled and normal conditions prevailed. In -dealing with tho Prinie Minister's commendation of tho three million loan flotation, Mr Myers said Mr "Massey had endeavoured to show that tho financial stringency was even greater in this mouth- than when, tho Mackenzie loan was floated; but there was the.awkward fact thai the underwriters in. London,:, besides obtaining their^ regu jar commissidn on the loan, £52,6X^,.found money spplentiful among tho general public, and

the terms of issue •so favourable to' themselves, that they were able to unload thoir holding of 80 per cent at a premium of lg per cont, and latterly at 2\. In addition, thero was the fact that some six or seven weeks before Mr Allen's loan was floated, New South Wales raised a long-dated loan of the same amount, repayable at ex* actly the same time, and on practically identical terms, at 4 per cent at 994, against New Zealand's 4 per cent at 98. Even more, recently Tasmania succeeded in floating a long-dated loan of £1,300,000 at .4 per cent at 99, while only four weeks before the prospectus of the Now Zealand loan -was issued Queensland got on to the market with a long-dated loan of £2,000,000 at 4 per cent at 99. All this proves that, if the present Minister of Finance considered the best course was to commit New Zealand to a 4 per cent loan for a long .period, tho terms he secured, while not unreasonable, were not so favourable as those of some Australian States, and certainly, hardly warrant the transaction being described as a "brilliant financial coup." The comparison made by Mr Myers between the flotation of tho two last loans was a much fairer one than that of the critics of tho transaction ho carried through, and he made out a very good case for the Liberal Government's action.-