WELLINGTON NOTES.

Tuapeka Times, Volume XXVII, Issue 4214, 19 June 1895, Page 3

WELLINGTON NOTES.

[OWN COBIiESPOKDENT.J LOAN CONVERSIONS. We are told by cable that Mr Ward, among many 'other things, had some intention of converting all our loans to a 3 per cent, basis, and that this idea has been shelved for a ; season. Loan conversions are abstruse problems to the general public, and it is an open question whether we would not have been in a much sounder financial position if : some of our loans had been allowed to run out their curreucy at the original rates. For instance : In ISG3 the New Zealand Government borrowed £500,000 at 4 per ceDt., with a sinking fund of 1 per cent. Thirty years afterwards this fund, with the interest it had earned, amounted to £163,000. During these years there was a great fall in the earniug power of money, and thiy 4 per cent, loan, i one-third of which was virtually repaid by the sinking fund, was a very good security on i 'Change ; a £100 bond was worth from £117 '. to £120, and as the nest-egg itself was earning £1 4s per cent, of the whole loan, the ; New Zealand taxpayer was only called upon i to provide £2 16s per cent, of interest, and '. this decreased year by year, so that in 1917 < the whole debt would have been extinguished altogether. But the Seddon Government had : announced their determination to construct public works " out of revenue." Revenue is generally considered to be legitimate income as apart from loans ; and in 1893 there was a sad deficiency (as there has been this year) '. wherewith to carry out this heroic policy, and, as the election? had to be fought that year, and any mention of borrowing would : have been condemned as an unclean thing, ■ our Wizard of Finance cast his eyes longingly . towards the savings of former Treasurers. So ; a conversion was resolved on, and the following was the process : — The holder of the 4 pet cent, bonds was the Bank of England, which was paid £117 for fach £100 bond. To obtain the money to buy the bank out a fresh 3£ per cent, loan was floated of £650,000 at £95 per £100 bond. This, by a eimple calculation, shows that New Zealand has to pay 3£ per cent, for ever, so to say, on £123 3s 2d instead of £2 16s on £100, the latter sum growing smaller yearly arid disappearing in 24 years. The interest now payable on each original £100 or its equivalent is £4 Is 6d per cent. This transaction was a ghastly bit of finance for the colony ; but it gave the Government ready cash to the extent of £163,700, with which to debauch the colony just before the general elections. This is the true inwardness of one of many operations, which shows how " revenue " has been raised and " surpluses " built up. Unfortunately for the present Government there are no more such pockets of sinking funds left to exploit, and that is why the recent conversion proposals have been dropped. The bondholders will stick to what they have until something better is offered them, and the only bribe which would tempt them would be longer-dated loans. This would be a crime against posterity, and there is no immediate benefit to be gained to make it worth while committing. STATE NOTES. Oneof the first tangible and visible evidences of Mr Ward's visit to London is the new postal £5-note. It reflects credit on the engraver, and its looks are much in its favor. It is also payable on demand by any postmaster in the colony, and is, in fact, a convenient form of P.O. order. How many bales of them have been landed is not stated ; they come in duty free ; but it is an open question whether they should not pay duty as dangerous goods ; but that by the way. The reason of their being is to bell them to the public as good money and so raise the wind. It is just another step towards a State Bank. Ido not feel much sympathy for- any kind ofbanks in these dark days, for overdrafts are but a sweet memory of the paot. To come back to our postal fivers : They are issued in the hope that people will take them, use them, and lose them as they do bank notes. Aud what is a bank note? It is but a cheque payable in gold on demand and issued under certain regulations gazetted iov the welfare and safety of the community. The difference between a cheque and a bank-note is this : a cheque emanates from a private individual and its value depends on his credit at the bank, which is obscure to the general public. A bank-note is voluntarily taken by the public and passes from hand to hand aDtl remains in circulation till it only too frequently becomes ragged, evil-smelling and undecipherable, and is sometimes lost or burnt, which is a calamity to the owner, but a source of profit and joy to the issuing bank. But so long as it is in existence, it is the attribute of money. And why ? Because the law provides a sufficient guarantee that the holder of bant notes to any amount may be protected. And, broadly speaking, there are three kinds of guarantees. First, the good management of the bank issuing the note. The second is that for every note issued a sovereign shall bo placed in the vaults of the bank ; and the third has found favor in the United States, and recognises the deposit of securities of a trustworthy character, generally Government slock or debentures, with an adequate margin to guard against fluctuations. Here is where the unalterable law of supply and demand comes in. The fundamental law is that the public cannot keep more notes in circulation than it has use for ; the .number of notes is determined by the capacity of the public to use them as a community, and that capacity cannot be increased or diminished whether ihe bank (or post-office) issues one hundred or , pne million.. It might be as that

the doubling of butcher's shops would double the sale of sirloins and sausages as that the issue of more notes would increase the use of them in trade or employment. The student of history recalls the French assignats, Confederate greenbacks, Argentine bonds, cedulas, etc., of which a bushel would not buy a pair of boots. We don't want to come to that sort of thiDg in New Zealand. . And, as the Trades Councils, the Knights of Labor and other societies make the subject of a State Bank of Issue a leading subject of discussion in their debates, it is just as well to understand what the institution of an inconvertible currency may lead us to. THE ÜBEWEBA MYSTERY. g Why three parties of surveyors, seventy co-operative roadmen, a battalion of the permanent force, a posse of police, a Cabinet Minister and a crowd of camp followers should have been sent to Urewera at all has not yet been explained. The only reason yet disclosed is that a triangular survey was a desirable thing ; but, as the Natives object to sell the land under the present law, and there is no great risk of the country taking to its heels, and, if it did, triangulation would not stop it, the policy of " letting sleeping dogs lie " would suggest itself. From information gleaned from Auckland papers and from private letters from the front, it appears that the unemployed diverted themselves on their journey from Auckland to Galatea by drinking and fighting ; that the troops were treated as feather-bed soldiers, being billeted at hotels on the road at 8s per day, and had coaches placed at their disposal for the last 36 miles of their forced march to the front ; thtffc the country through which the road is being made is a barren scoria desert, and that it belongs to Maories, who object to the whole proceeding. If the cost of this invasion were expended in opening up Crown Lands for settlement, there would be a moderate sort of righteousness about it. As it is, neither the surveys, the roads nor the belligerent force will do an atom of good until last year's confiscatory Native Land Act is repealed and something more equitable substituted for it. KUMARA ASKS FOB MOBE. The Kurnara Miners' Association has arrived at the conclusion that the Government should purchase Holmes' private water-race, and then reduce the price of water to the miners. Had this been done a dozen years ago there might have been good reasons advanced for the purchase ; but Kumara is a worked-out field, unless payable gold is found at deeper levels, which is problematical. Two yeaps ago Parliament was petitioned to reduce the price of water and Mr Seddon, who is member for that district, opposed any reduction. Had the Government then reduced the rate, Mr Holmes would have had to follow suit and his property would have brought in a much smaller income ; and Mr Holmes is said not to be the sole proprietor, a considerable interest in it being held by a distinguished friend of his. This proposed purchase of a property which has lost its former value requires watching by Parliament.