Wellington Independent. "NOTHING EXTENUATE; NOR SET DOWN AUGHT IN MALICE." SATURDAY, 23rd NOVEMBER, 1867.

Wellington Independent, Volume XXII, Issue XXII, 23 November 1867, Page 4

Wellington Independent. "NOTHING EXTENUATE; NOR SET DOWN AUGHT IN MALICE." SATURDAY, 23rd NOVEMBER, 1867.

The expected sensitiveness of the London money market in reference to New Zealand finance is confirmed by the advices received yesterday. The bare mention of the intention to propose a consolidated guarantee of Provincial bonds, hashad the effect of causing considerable activity in the securities of the various provinces. All the intelligence that had reached London was that the Provincial bonds were to be consolidated ; the conditions not being hinted at. If any hint at all had got abroad, it was to the effect that no Provincial bonds would be guaranteed except by consolidation^ and yet j their value is immediately increased. , This enhanced value was only what was ! to be anticipated ; but if they thus rise— "if they thus answer to the whip," as Mr Fitzherbert said, while the terms on which they are to be guaranteed were all unknown, how fully may we anticipate that they will rise to an equivalent market value with Colonial Government bonds, when it becomes known that they have been guaranteed " from and after t the passing of the Consolidation Act." It will be seen by the following extracts from Westgarth's Circular of the 26th September, that holders care little or nothing about consolidation so long as the Provincial bonds are guaranteed, as " whether exchanged or not they will be virtually Colonial Government stocks": — " The New Zealand Government have at length decided to proceed at once with the long projected measure of consolidation for the various Provincial Loans and for giving them the Colonial Guarantee. The measure is to embrace the loans already issued, although it does not yet appear on what terms the exchange will be offered. On this point, however, as the Provincial Securities will be transferred to the Colonial Government, it is to be inferred that the Provincial Bonds, whether exchanged or not, will be virtually Cvivulal dc/vernment Stocks." Further on in the Circular there is another paragraph, which informs us that while the Colonial Government securities have slightly declined, there has beefc active speculation in Provincial bonds : — " The New Zealand securities, excepting vf per cent, rise in the 5 per cents, are unchanged in price; this position, however, with a month's further interest upon them, being equal to a slight reduction. The Provincial stocks have attracted some attention upon the reported consolidation. There have been some large transactions in Otago 6 per cents, at an average advance of 2£- per cent. The Canterbury 6 per cent, fifty years loan may also be quoted 2<j per cent, higher, but the price is still depressed by the prospect of a large unissued portion of this loan, offered unsuccessfully last February, coming soon again upon the market. The Canterbury Railway Loan, which stands well in point of security, might now have been quoted at some advance but for an unissued balance of £50,000 which must be shortly offered." Under date Ist October, " increased attention" is reported, and Provincial debentures continue to rise. " The only change to be recorded since 26th ult., arises from the increased attention commanded by the New Zealand Provincial Debentures, in view both of the immediately expected Consolidation and Colonial Guarantee, and tho relatively low price at which they still stand. A salo of £100,000 Canterbury 6 per cents, (tho half million loan) has just been effected on terms much higher than were previously attainable for so large an amount of a provincial stock. In this state of the market all the Otago 6 per cents, offering at or under 94 appear to have been taken up, and holders now ask 95 and upwards. To-day the Bunk of New Zealand, acting for the Auckland Provincial Government, offer for sale, on the Bth iusfc., £200,000 G per cents, parfc of half million loan of that Province, due 1896 — the price is reserved. Otago 6 per cents, may now bo quoted 94-7, and Canterbury (half-million 50 ycftrs loan) 8 per cents. 90-5. While it must be very gratifying to find that the Provincial bonds are thus looking up, the very high rate to which they will reach aa soon as it is known that they are " guaranteed" — that the same security on which the Colonial bonds are based is extended to Provincial bonds — will render consolidation impossible except on identical terms. The Provincial six per cent bond will be worth precisely the same as the six per cent Colonial bond ; and so, not only Avill all this enhanced value go into the pockets of speculators, but if consolidation is effected at all, it must be effected at the loss of at least all the expenses, while the' seven, eight, and ten per cent bonds will be too high to convert. Nothing would have been more just and easy thau consolidation under the plan originally proposed by the Government, and the colony while it added to its financial imputation | would have swelled its exchequer by some £300,000 legitimate profit. Under the

plan sanctioned consolidation is difficult and to a large extent impossible ; it exposes the Government to the ridicule of having been simple enough to be outwitted or weak enough to have been forced into a ruinous concession, and it puts into the pockets of speculators an amount larger than the additional loan (£260,000) which necessity obliges us to borrow.