The New Zealand Railways Magazine, Volume 7, Issue 1 (May 1, 1932.)
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Mr. Edward Dobson, the first Engineer of Working Railways in New Zealand.
The Provincial Government of Canterbury found difficulty in raising capital by means of loans on the London market. The security offered did not appeal to investors. The General Government had first call on the principal sources of revenue, viz.: Lands and Customs, and the Provincial Government had, as expressed by Mr. Superintendent Moorhouse, merely a reversionary interest in a contingent remainder.
When the General Government was compelled to borrow money to pay for the suppression of native disturbances, not only did the Provincial revenue suffer, but there was competition in London for the loan money available. In 1864 the Provincial Government sought assistance by asking that the General Government of the Colony should guarantee the Provincial loans, but as both bodies continued to borrow from the banks on the security of the unsold debentures, and were subsequently forced to sell these debentures at much less than their face value, the guarantee was not of material assistance to Canterbury.
The English Agent of the Province (Mr. H. Selfe Selfe), in conjunction with the London Manager of the Union Bank of Australia, was able to sell four instalments, each nominally of £50,000, of the Lyttelton to Christchurch railway loan, but when in February 1867 the Bank of New Zealand, as financial agents for Canterbury (Mr. Selfe Selfe having resigned) offered for sale in London £300,000 of the Canterbury Loan (1862) at 95, only £3,900 was applied for at or above the minimum, and only £10,130 altogether. There was no scarcity of money at the time. The failure was due to the indisposition of the public to invest in New Zealand provincial securities.
On 3rd May, 1867, the Colonial Secretary (Mr. E. W. Stafford) advised the Superintendent that his Government intended, in view of the failure of the Provincial loan, to submit to the General Assembly a measure for converting the Provincial loans into Colonial Stock. The conversion was authorised by the Crown Debts Act, 1867, and further borrowing by the Provinces ceased. The balances of the then current loans of Canterbury Province were converted into General Government stock at £97 per £100.