AIC
511
Great success both from the point of view of the Colonial Government and from that of the underwriters. Unfortunately, however, before the tenders were received a great change came over the Stock market caused by the general state of nervousness which has arisen in connection with the Conference at Algeciras and the state of uncertainty which exists as to the political future of South Africa. As a consequence, many people who in ordinary circumstances would have sent in tenders for the Loan held themselves aloof and the Loan became very much the affair of the underwriters and those they could immediately influence.
I enclose for the information of the Colonial Government a copy of the Times money article of the 21st instant from which it will be seen that the comparative failure of the Loan has been attributed to the fact that the Loan was issued as a tender Loan and not in the shape of a subscription or fixed price Loan. Upon this, I would remark that the issuers of Government Loans are always placed upon the horns of a dilemma when fixing the conditions of an issue.
On the one hand, they are told by the newspapers when a Loan is issued at a fixed price and is subscribed many times over that they have fixed the price too low and therefore given their principals away. On the other hand, they are told in the case of a tender loan which fails to go that they ought to have known better and to have issued at a subscription price, the fact being ignored that it is the interest of the Government on whose behalf the Loan is issued that ought to be the governing factor in settling the terms of issue and that the interests of the Stock Exchange can only be regarded as being of quite secondary importance.
13.
For the above reasons the issuers of Loans on behalf
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