PAYING FOR PATRIOTISM.

Auckland Star, Volume XLVII, Issue 68, 20 March 1916, Page 4

PAYING FOR PATRIOTISM.

was cost hi soxxznoirs.

CAN WE FOOT OUK OWN BILLS?

"YES," SAYS AUSTRALIA.

.COMMONWEALTH BANK GOVEENOK SHOWS HOW.

"Some people are Crying out for Sew Zealand to raise a large war ■ loan locally. Well, why didn't some of them subscribe to the recent two » million loan! I have been told that v the Dominion must raise a war loan, and give five per cent. But they will J not get it. They .won't get more » than four and a-half per cent for ' an internal loan." , So Sir Joseph Ward is Baid to have c declared last week, and whether the remark indicates the Government's un- « willingness t6 finance our own war re- - sponsibilities or merely it* determina- ' tion to keep the interest of a prospec- j tive loan down to "patriotic" rates it • makes all the more interesting the story of what the Commonwealth of Australia has done in the direction of "minding its own business," as told to a "Star" representative this morning by Mr. Denison Miller, the Governor of the Commonwealth Bank, who is at present staying in Auckland. Mr. Miller gently but firmly declined to be drawn *Wo an expression of opinion as to whether the experience of Australia justified a policy of footing our own bills throughout "the Dominion, which, he declared, was a political question that he was not prepared to diseusE, but his 6tory of the flotation of the patriotic loans in the Commonwealth leave* no doubt a* to the practicability and success of the policy there. » "When the war first broke out the Commonwealth Government proposed to finance the war expenditure from its 6wn resources," 6tated Mr. Miller. "Subsequent conditions, however, cut off the markets of Great Britain for the State* which were committed to a large expenditure for the ensuing year on public works. The Commonwealth Government therefore arranged to lend the States the sum of £18,000,000, which was really money with the Australian note issue, and accepted from the British Government, an advance for war purposes. As soon as this advance was expended the Commonwealth Government at once turned its attention* to financing its own war expenditure, and Parliament authorised the raising of a loan of £25,000.000. CONDITIONS OF THE LOAN. The first instalment put on the market was for £5,600,000. j The list closed on August M. i 1915. The rate of interest was tj per cent, the issue price at par. Interest was made free of Commonwealth and State income tax. Bonds or inscribed stock could he taken at the option of the applicant, and the same were made acceptable in the payment of probate and succession duties. The loan was made a trustee investment, and repayable at par at Sydney, Melbourne, Brisbane, Adelaide, Perth, and Hobart offices of the Commonwealth Bank; interest payable half-year at all branches of the bank in the State capitals, and interest was made chargeable to the Consolidated Revenue of the Commonwealth. The Commonwealth Bank Australia was authorised to receive applications for subscriptions to the loan—lo per cent on application, 15 per cent on September 15, 1915; 20 per cent - on October 16; 25 per cent on November 15, and 30 per cent on November 30. A full half-year's interest was payable on December 15,1915. There were 15.697 applications for ths loan, and the amount applied for was 4.13,380,000—f0r a loan of £5,000,000. THE COST INCREASES. "As the number of troops being sent : from the Commonwealth was rapidly increasing, and they were being equipped ■ both in camp and in the field in the ' ..i.-i«\>f.'iHi»a manner, the expenditure 1 rose, to the sum of 40 or 50 millions 1 sterling per annum, and power .was obl tamed from Parliament to borrow - a '• further 18 millions of money, and a t second war loan was issued for 10 mil-: lions, the subscription list closing on January 31, 1916. Ten per cent, was payable on application, 15 per cent, oh February 29, 20 per cent, on March 31, - 25 per cent, on April 28, and "30 per cent. » on May 31. The same terms and art rangements as for the first loan were observed as nearly as possible. In re- • sponse to this second flotation there • were 28,938 applications for £21,651,720, - and applications from distant places are j ..till being received. Of the expenditure being incurred in equipping the troops | the Minister of Defence states that J about three-quarters is spent in the J Commonwealth. When the first .loan ' was floated Australia had passed ' through a rather severe drousht, but ' the response was considered as highly • satisfactory. At the present time "the 1 country is experiencing the most bounti--1 ful harvest on record, and no doubt this • had a marked effect on the success of ' the second issue." [ . CONFIDENCE IN THE FUTURE. . "It is thought," continued Mr. Miller, . "that if the war continues practically ; all the money required within the Com- . monwealth for the equipment of the j troops will be found by the public, who . evidently look upon it both as a patriotic duty and a gilt-edged investment yielaing a good rate of interest. The " Commonwealth Bank was entrusted : with the management of both issues 1 and the cost, including advertising' J printing, brokerage, and the bank fee 1 for paying half-yearly interest durin" » the currency of the war and the pay. | ment of the principal when the loan 1 matures, works out for the first loan at ■ 5/1 per cent, and for the second loan of i 4/7 per cent. Usually it costs eomei taing over 2 per cent, for .s.vAiw loans 'li the London market." \ DID NEW ZEALAND HELP? Asked whether it was likely that much . New Zealand money was invested n . either of the loans," Mr. Miller stated , that applications v.-ere only received f frcrc within the Commonwealth itself , except in the case of a few soldiers m - E SJ"pt and London who desired to send their contributions. The belief that a t considerable quantity of New Zealand ■ money went into the first Common- ; wealth, loan in the absence of a Domin- ; ion loan might have arisen from the f fact that Australian financial and in- > surancc institutions, which also operated £ Xew Zealand, invested in the loan t To what extent they might have used ; the money o: New Zealand members or ! branches he could not say. ' ~Q uf s t:or' o d w 'th regard' to the effect | the loans had had upon public works and the general development of the , country Mr. Miller said that the sentiment of the country was that it was de- - terminal to see the war through, and i although there was no money available itor public works, that reauired for the

wax would be found. All the State* Li one bad stopped raising money for mS. : works, and were confining their eaertk. to the repayment of due. Expenditure on public wohaTwif - confined to what could be spared outof revenue. -- FINANCIAL POSmON FD3S. With regard to the posrtjon of ft» farmer and others, who in the ordiaaw way required finance to continue "tt# development of the staple indoctritt of the country, Mr. Miller declared, that ta far the effect of. the loan upon the'"*eaeral finances of the country had not been - appreciable, as the trading basks' figure- -'- showed no contraction up to the Hu when the last returns were available. Wt the quarter ending December, 1915 ; ; "In view of Australia's experience ani judging by what you have learned ani - seen in New Zealand, do you think the -'• time is ripe for a general policy ani6n»t : . the Dominions of finding their own war "' finance ?" asked the pressman. ' . "That is a political question which 1 • am not able to discuss," replied Mr. Miller. "I cai only recount to you what has been our experience, but itV-*? not for mc to suggest what the other Dominions should do."