509
guaranteed that the Loan should be placed at 3% per cent.
1 per cent commission to Car Brokers for securing subscriptions to the underwriting arrangement,
¼ per cent (or rather less) approximately for miscellaneous expenses i.e. printing, advertising, stamp duty and legal charges for preparing the declaration required in the case of an issue of Stock under the provisions of the Colonial Stock Act.
The total expenses to the Colony may therefore be taken approximately as 2¼.0.0. per cent + 9s/£4 per cent for the value of deferred payments, which means that the Colony will receive about 296.1.4. per cent for its Loan and that it will have to pay £3.12.10 per cent for the use of the money + 21.0.10 per cent further five years hence when the Sinking Fund under the Ordinance No. 11 of 1906 is fixed to commence.
10. I would here explain that since the great change which has come over the Stock Exchange and the Money Market since the war in South Africa, it has become practically impossible to place Loans bearing a comparatively low rate of interest without first underwriting; and no underwriting is effected on lower terms than those arranged in the case of the Hong-Kong Loan. The position of affairs is in our opinion most unsatisfactory, but we have no cause to fight against the system, as the Stock Exchange have it in their power to kill any issue by leaving it severely alone. In this instance, however, the underwriting has been fully earned, as a reference to the schedule of tenders which is sent with this letter shows that the loan was taken up by the public to the extent of only £566,200
and that the balance...
£776,300
or about 58 per cent has had to be taken by the underwriters.