The Auckland Star: WITH WHICH ARE INCORPORATES The Evening News, Morning News and The Echo. MONDAY, AUGUST 7, 1916. THE WAR LOAN.

Auckland Star, Volume XLVII, Issue 187, 7 August 1916, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATES The Evening News, Morning News and The Echo.

MONDAY, AUGUST 7, 1916. THE WAR LOAN.

For the cause that lacks aaaistance, For the wrong that needt rtaittance, For the future in th« distent*, And th* good that u» am do.

The Government have announced that the country will be aaked immediately to lend eight millions this year lor war purposes. Interest is to be at 4| per cent, with exemption from income tax, which, in the case of the large investor, may bring the return almost up to that obtained from mortgages. The floating of a loan of eight millions in a country with a population of only 1,100,000 is a very large transaction, but our prosperity is such that there should be no anxiety as to the response. The non-interest bearing deposits in the New Zealand tanks last quarter amounted to the huge total of twenty and a-half millions. Some of this money has been invested in London, and is assisting the finance of the Imperial Government; but there must be a very largo amount available. The fact is that the country for some time has been bursting with money, and if a war loan had been floated last year it would have been a success. Again, this year our exports will realise many millions in excess of our imports, and this surplus must bo invested somewhere. It is much better that it should be used directly to supply the wants of the New Zealand Government than that it should go abroad, even if the money comes back to us through tho medium of the Imperial authorities. Besides the eight millions to be offered locally, the Colonial Treasurer asks for authority to borrow another eight millions from the Home Government, and the money raised in the Dominion will be largely expended here. It i 3 not likely, therefore, to materially raise the current rate of interest. There arc three reasons why we should raise as much money locally as possible. The first is that we are helping the iEother Country, which is carrying an enormous financial burden. Britain has had not only to finance her own enormous war expenditure, but to provide money for her Allies and the Dominions. The selfreliant policy was iong overdue in thi3 Dominion. The second is that it is better for our prosperity that as much of our debt as possible should be internal, so that the interest on it will circulate in the country and not be sent abroad. The interest that goes to the oversea creditor is really paid for in exports, and tliat portion represents so much loss in wealth. Some of the interest paid to creditors in the country comes back to the Government in the form of taxation. The third reason is that it is much cheaper to raise an ordinary loan here than in London. Sir Joseph Ward mentioned in the Budget that the cost of raising locally, last year, the Public Works loan of £2,000,----000 was only one-quarter per cent, whereas the cost of raising a similar loan at par in London would amount to roughly 2$ per cent. There does sot seem to be full information as to the cost of the war loans obtained through the Imperial Government; but the "Lyttelton Times" draws attention to entries in the Public Accounts which show that this money is not obtained without incidental expenses. One item under war expenditure reads: "Public Kevenues Amendment Act, 1914 (authority to borrow i £2,000,000) — charges and expenses, £105,263." A similar charge in connection with authority to borrow ten millions was only £24,242. We hope the Government will advertise this loan boldly, pointing out to everybody, from the man with £5 to the man with £10,000, that' to invest in it is a duty he owes to his country. Financial institutions will not require much attention; it is their business to follow the money market. But tho individual is often slow to realise war necessities, and these should be vigorously brought to his notice. We should like to see an organised appeal for thrift and contributions to the loan made to all classes. It is intended to issue debentures in sums of £5 upwards, 'but the mere issuing will not suffice. In England recently <war bonds for amounts below £100 and war saving certificates of £1 were being taken up at the rate of over £1,000,000 a week. There should be a campaign for thrift similar to that conducted at Home by the National War Savings Committee, That this movement in Britain has not met with the desired success is no reason why "we should not copy it in New Zealand, where, as at Home, there is a great deal of extravagance. A bold and enterprising policy would eeenre a good deal of the money so spent, at once obtaining money wanted for war purposes and strengthening the character of the people. Australia has raised internally over £56,000,000 in war loans, and we should be able to do more in proportion.