NEW ZEALAND LOANS.

Thames Advertiser, Volume VIII, Issue 2102, 23 July 1875, Page 2

NEW ZEALAND LOANS.

. BINGOLMIDISOLOSURB?. (FEB PRESS AGENCY.) • WBLiiNoroif, Thursday, 8 p.m. TLo corrosp'ondonco rclativo to tbo negotiation of tho four-million loan wns laid on tbo tablo to-day. It allows any* thing but an amicablo feeling as existing between Sir Julius Yogel and tho loan agents, Messrs Julyan and Sargeant, and Dr fleathorston, Tho corrcspondonco opens with a report from the Loan Agent to tho Colonial Secretary, but it is not signed by Sir Julius Yogel. Throughout it and tho other of their loiters,they tako 'objection to tbo > way in which tho loaa Ltls boon negotiated. Tlioy, sayi—"As tho' order referred to contained no direction as to tho dato at which tho Government desired us , to negotiate,,nor any intimation as to whether wo wero oxpeotcd to placo tho loan upon tho market by ono or moro operations, wo wero necessarily governed upon Iheso points by Mr Vogel. From him wo learned that tho liabilities of tho colony wero such as to render it advisable that tho wholo amount authorised by the Act should bo disposed of by ono operation Being awaro that a portion of tho last issuo of tho Now Zealand debentures wero still iu tho hands of

speculators, and that the demand for those securities was of avery limited character, it was evident to us that it would be hopeless to expect the open market to atonco absorb so largo an amount., We had, therefore, no alternative but that of resorting • to the contractor, or syndicate To foraako the old channel through which your loans hitherto have been so successfully placed upon the markot, and to resort to either of these expensive and by bo means popular agencies for dealing in Joans, was a step that nothing could have justified .our acceding to,'but the: absolute necessity under which wo wero placed, of immediately raising (or procuring a guarantee price for) at least double the amount that the publio were prepared to lend. Of the two agencies' named we should have preferred the syndicate, as presenting to the publio no apparent deviation from previous practice, and as being in all probability less costly, but after breaking off our first negotiations with Messrs Hothschild and Pons, became they declined to givo more than 88 net for tho 4i per cent, loan, we found the syndicate unwillinß to guarantee an acceptable price for more than one-half the amount required, and we had' consequently torevivo our negotiations with Messrs Bothscliild, which resulted intheiracceptingourofferat9lnet." They send an elaborate report showing the actual amount received by the Now Zealand Government for the loan.' Mr Vogel sends a separate report. J-lo says he does not agrco with the report of his co-agents, and gives his reasons, at the same, time attributing motives to them for not agreeing with him, as, for instance, he says, referring to their report" If the letter had been signed by Sir P. G, Julyan and Mr Sargeaunt alone, it would have beenworthy of little remark, for it would only have appeared to be an eagej bid for securing the negotiation of future loans. The addition of the AgentGeneral's signature gives to the letter another complexion. ■ I confess to feeling a great surprise at his having signed the letter, and of course the letter borrows such weight in consequence as you and others may be disposed to accord to it. I shall probably take another opportunity of placing on record my recollection of Mat took place between the agents %uring the negotiation of the loan, I had immenso difficulties to contend with in the'natural reluctance felt by those interested in colonial loans to seeing such a house as that of Bothscliild. and Sons embarking in the business. Sir P. G, Julyan so conducted negotiations with that house as to lead to their utter breakdown. I took them up, and, with Dr Feathorston's assistance, carried them to a result which those persons who have spoken to me on the subject have told mo they considered a brilliant 'success. I was under the impression that Dr Peatherston coincided with me, and I was amazed at seeing his Bignaturo to the letter, lie has ■ told me that he has not actually signed the letter,, but ho. does not withdraw it, and it is incredible that SirP G. Julyan and Mr Sargeaunt would havo Attached his signature without considering they had authority to do.so. At present I only observe upon the letter to say this, that tho insinuation that Messrs Bothscliild only bring out the loans of embarrassed States, or that it is injurious to the credit of a State for them to bring out a loan is absurd and ridiculous. They only bring out loans in which they believe, and the fact of their bringing out a loan gives it a reputation quite beyond anything in the power of Sir P. U. Julyan. and Mr Sargeaunt.. People subscribe to Eothschild and Sons loans because that house brings them out. lam not aware they adopt a similar course, because of tho Crown agents issuing loans. Those gentlemen are regarded as eminently respectable, but they have nothing like . the money power or reputation for commercial sagacity that belongs to Messrs Eothschild and Sons. I don't believe that tho syndicate, without Messrs Bothachild and Sons, would have taken up more than £2,000,000, or at more than 80, nor that tho publio, without the syndicate or Messrs Bothscliild, would havo takon up anything like that amount. There are two circumstances in this matter to which you will no doubt attach much weight. 1 allude first to the fact I incidentally mentioned, that though Dr Featherston informed me tho letter was not signed, a copy was sent to me by Sir P, G. Julyan, in which Dr Foatherston's usual signature was inserted between thoseofSirP.G.JulyanandMrSergeaunt. To say the least, this betrays an alarming laxity in dealing with a signature so important as that of tho Agent-General. The second circumstance is that though I am one of the agents, tho other three agents, without inviting me to attend, prepared or approved, in what I may call a secret conclave, a report for submission to me, and also decided upon a letter for their separate signature. This was dono behind my back, though it is not too much to say that to me is due the successful negotiation of tho loin. I proceed to report to you on the sale of the four millions, reserving for possibly a future occasion further remarks on the course adopted by other agents. I forward you a copy of a contraot entered into with Messrs Eothschild. The largo amount of the loan, and the condition of New Zealand securities in the money market, caused me to think it desirable that such an arrangement should bo made. I believe that when all the circumstances are considered, the result should bo regarded as exceedingly satisfactory, and as one which only Messrs Eothschild and . Sons' immense influence could havo achieved. Those gentlemen authorised me to say (I quote their written words):' The whole loan for four millions was mow than fully applied for. We could have given the wholeloan away and not.have kept sixpence ourselves' Wo have made 1,700 allotments, and never had a better list of subscribers. Several banks and insurance companies subscribed largely, and wo have overy reason to think that they will hold ■ tho stoeV as an investment.' Necessarily arrangements with Messrs Eothschild wero not in accordance with the interests of those who had been accustomed to deal with colonial securities. Consequently some amount of opposition to the loan has been shown, but that was a contingency with which Messrs Eothschild had to deal. Tho price at which the loan was issued was nominally £94. _ Tho instalments spread brer, a period in such a manner as to equal 1 per cent., making the -price to tho publio £93. The commission which Messrs Eothschild received was 2 per cent., so that the net return to tho Government will be £91."

Then follows an acrimonious and rery voluminous correspondence between Mr Vogel'and Lis co-agents, as to the manner in which their respective reports had been drawn up. The loan Agents say:- I 'On the .18th of February last we met at your request, at your residence, No. 40, George-street, Fortman Square. We fou id a leading member of the Stock Exchange with you, and you stated to us that ho had informed you that in his

opinion two pillions might be placed at a price to realise 92 per cent., three millions 91, and fonr millions 90. He added that if two millions were sold to a syndicate at 92, he was of opinion that the other two millions might, in about eight months, be likewise disposed of. y . He suggested that the syndicate should have the option of the last two millions at any, time within the eight months. You objected to these terms, and stated in his presence that the ' necessities of the Government of New Zealand were such must have four millions taken firm, and added, 'in fact, the Government was in a mess, and must get out of it as best it could.' We (tho four loan agents) subsequently discussed tho matter (the member of the Stock Exchange having left), and you informed us that, in your opinion, it would be very advantageous to dispose of tho wholo four millions to Messrs Eothschild and Sons if necessary at the price offered by them, viz., 88 net; but that you had reason to believe that they would give mere, to net 90. Oneof us declared in tho most emphatic manner that he for ono would neither accept nor entertain such preposition till it had been proved that better terms could not be obtained elsewhere, and in this determination your other co-agents agreed. You informed us that you considered that sorious responsibility would rest with us, if we rejected suoh terms. In turn we stated that in our opinion we should assume a much heavier responsibility by agreeing to such a sacrifice. You stated that in your opinion it would be an immense advantage to the colony lo havo at its back such a financial house 'as I that of Bothsohild, and that the credit of New Zealand had already suffered seriously from want of such an agency, and that if Eothschild had held such a position, you were sure they would either have immediately answered the articles hostile to New Zealand which appeared in Fme/s Magazine and tho Pall Mall Gazette, or have telegraphed to the Government for instructions on tho subject. We did not concur in either opinion. During our discussion, finding that material differences of opinion existed between you and ourselves, wo reminded you we wero clothed, by the order of the Governor in Council, with equal powers with yourself, and that we were therefore bound to express our opinion freely, and exercise our' own judgment guided by past experience. youthen stated that if you, as Colonial Treasurer, gave us ari'.order as loan agents to accept Eothschild's terms we should bo'bound to do so; and when, on a subsequent occasion, you repeated the same, we, without calling in question tho propriety of such an intimation from our co-agent, or allowing it to influence our independence of action in the trust confided to us by the Colonial Government, expressed our readiness and our intention to bo guided by tho necessities of the Government, upon which you alono could enlighten us, but at the same time one of us told you distinctly that in his opinion the order of ihe Governor in Council appointing agents gavo you no power to give your co-agents suoh an order; that he had carefully considered the question, and that if you were determined on your own responsibility, to sell to Eothschild at a price' ho considered unsatisfactory, he would withdraw from all participation in the transaction, but guided by the necessities of the New Zealand Government, he would not decline to sign the debentures. Such appeared the only course open to him, but in return for the confidence which successive Colonial Cabinets had reposed in himself and Sir P. G. Julyan, whioh be had always highly prized, he would be compelled to record tho reasons which had induced him to pursue such a course of action. Wo frequently discussed with you the expediency or Otherwise of raising money by instalments, instead of dealing with the whole loan by one operation. We are not aware of your having told us that the proceeds of the sale of the four millions debentures would be required to pay for public works to be completed during this and next year. On the conirary, wo endeavoured to elicit from you what the wants of the Government were which would justify us in consenting to the course you advocated, of disposing of the whole at ence, and although we failed to obtain from you any exaot statement of your requirements, you distinctly informed us that the negotiations must bo conducted on tho basis of a fixed or firm price for the whole, three-fourths of the monoy to be paid at short intervals, ending in August, 1875, and the remaining fourth not later than February, 1876. Had wo been given to understand that the expenditure of money was to havo been spread oyer two years, we should most certainly have been no parties, in the absence of instructions, to the raising of tho whole amount so far in advance, a step which may, and probably will, entail upon the colony considerable loss, inasmuch as we cannot hopi to obtain upon proper security for a temporary loan of the money the same rate of interest as will be paid for it, the difference between the two rates being at this moment upwards of 2 per cent, against the Government. Wo still think abetter price would have been secured for this loan if the requirements of your Government had permitted the sale of it by two instalments, and we agreed to the price finally given by Eothschild (91) on the understanding that it was necessary to secure at once a ' firm price' for tho whole, but we beg (o repeat what we have already stated in your to the Colonial Secretary, dated 19th ultimo, that, considering its magnitude, 1 the terms upon which this transaction has been carried out appear to us exceptionally favourable,'"