CO129-336 - Governor Nathan & Public Offices - 1906 [11-12] — Page 516

CO129 Colonial Office Hong Kong Records 理藩院香港檔案 All AI Reviewed

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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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 -7-

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AIC 511 great miccess both from the point of view of the Colonial Goverment 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 commection 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 Luan became very much the affair of the under- writers 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 wa8 issued as a tender Lean and not in the shape of a subscrip- tion or fixed price Loan. Upon this I would remark that the issuers of Government Loans are always ploood upon the horms of a dilemas when fixing the conditions of an isme. On the one hand they are told by the newspapers when a Lean is issued at a fixed price and is subscribed many times over that they have fized the price too low and therefore given their principals way. On the othar 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 subseription 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 guverning factor in settling the terms of isme and that the interesta of the Stock Exchange oan only be regarded as being of quite secundary importance. 13. For the above reasons the issuers of Loans on -7- hehalf

2026-06-02 12:08:13 · Baseline

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AIC

511

great miccess both from the point of view of the Colonial Goverment 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 commection 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 Luan became very much the affair of the under- writers 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 wa8

issued as a tender Lean and not in the shape of a subscrip-

tion or fixed price Loan. Upon this I would remark that

the issuers of Government Loans are always ploood upon

the horms of a dilemas when fixing the conditions of an

isme. On the one hand they are told by the newspapers

when a Lean is issued at a fixed price and is subscribed

many times over that they have fized the price too low

and therefore given their principals way. On the othar

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 subseription 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 guverning

factor in settling the terms of isme and that the interesta

of the Stock Exchange oan only be regarded as being of quite secundary importance.

13.

For the above reasons the issuers of Loans on

-7-

hehalf

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