South Australian Weekly Chronicle (Adelaide, SA : 1858 – 1867) Saturday 8 December 1866
The Melbourne Age has a leader upon Government loans, and complains that Victoria has been placed at a disadvantage in the money market ‘by the reckless conduct of persons administering the financial affairs of the other colonies.’ After adverting to the ‘utter distrust’ occasioned in London by the profligacy of Queensland in borrowing at 10 per cent, in Melbourne and Sydney, the Age proceeds to denounce the last New South Wales loan. Remarking that the elder colony has gone beyond the younger and poorer one in recklessness, the Age thus describes the little game by means of which New South Wales has contrived, for a brief period, to keep the wolf from the door : —
‘Despairing of getting money by ordinary means, New South Wales has taken up the gambling notion, by means of which fifth-rate foreign States, of bad financial reputation, get hold of money speculatively lent. The representatives of our trans-Murray neighbors have added the attraction of a lottery to the inducement of selling their 5 per cent. bonds at 10 per cent, discount. The plan has succeeded, and New South Wales has got rid of £850,000 of 5 per cent, bonds at 90. But it becomes a question whether the present cure is not worse than the past disease of impecuniosity, which had become chronic. The country has sold its birthright for a mess of pottage. It appears that, under the provisions of the wild scheme adopted, there are to be annual drawings of the numbers of debentures, and the fortunate winners are to be paid off each December, to the extent of £100,000, until the debt be extinguished. We, of course, take it for granted that New South Wales really means to pay. It is calculated that, for the money the New South Wales people have succeeded in borrowing, they will have to incur an average interest of nine per cent, per annum. Let us trace the working out of the first repaid £100,000 of debentures. Sold in London at 90, they will produce £90,000, less the charge made by the Bank acting as agent for the colony. In December, 1867, the holders of the winning numbers will be entitled to par for their bonds, or £100,000, besides £6,000 interest ; in all, £105,000 for a 12 months’ loan of £90,000, or nearly 17 per cent, for the year’s advance. To pay such a price for money, savors strongly of the recklessness of the half-ruined gamester, and it must indelibly stain the financial reputation of the borrower.’
There is much force in this ; but if the necessities of New South Wales have compelled its Government to have recourse to an unusual and expensive mode of tiding over the difficulty, the plan adopted is, certainly strictly legal. But how did the model Government of the Age act, when lately hard up for cash ; and that, too, in consequence of its own unconstitutional action ?
Why, the Chief Secretary of Victoria, being Director of the Melbourne branch of the London Chartered Bank, compelled the poor Manager of that establishment to make advances, contrary to law, for the use of the Government ; and to sue the Executive every evening, for the accommodation extorted in the morning! For sanctioning this piece of financial jugglery, opposed both to the express provisions of the Constitution Act and the Audit Act, Sir Charles Darling was dismissed by the Imperial authorities from the Governorship of Victoria. Those who live in glass houses should not be the first to cast stones; and the Age ought to have remembered that if the Government of New South Wales have adopted an unusual course in raising money it is at least legal, and not dishonorable; whereas the course pursued by Mr. McCulloch, with the approval of the Age and Sir Charles Darling, was equally unusual, and neither legal nor honorable.