NEW ZEALAND AND CONVERSION.

Auckland Star, Volume LXIII, Issue 178, 29 July 1932, Page 6

NEW ZEALAND AND CONVERSION.

An issue of much importance to New Zealand is raised by the suggestion that, the Dominion should benefit by Britain's successful conversion of the £2,000,000,000 war loan, and reports from Ottawa indicate that Mr. Coates will take up with the British Chancellor of the Exchequer the question of passing on the reduction of interest on the amount of £24,000,000 owed by New Zealand to the Home Government. The estimated saving by such a conversion would ha £360,000, but it is to be remembered that at the present time the payments are suspended, under the Hoover moratorium, and the saving applies to normal conditions. Of greater concern is the burden of the bulk of the privately held overseas debt. The, British portion amounts to about £130,000,000, and New Zealand needs relief in the payments on this sum. The \ view is held by many in New Zealand that Mr. Coates should not confine his discussions to the £24,000,000, but should seek to enlist the support of the British Government for an appeal to the private bondholders at Home. That there are no such loans coming to maturity for some years would make such a conversion very difficult, but the abnormal condition of the times will probably lead to the matter being broached. The question is linked up with that of trade revival, and there is no doubt that anything that could be done to relieve the Dominion of its growing weight of debt would quickly show its effects in increased buying of British goods. At the same time, one must bear in mind Britain's obligations and the sacrifices that have had to bo made to assist Europe, as Avell as the loss that has had to be accepted through the default of some foreign debtors. This is no reason, however, why inter-Empire debts should not be discussed without further delay. To what length can Britain go to give the Dominions assistance? That is the crucial question, and no doubt the answer will be determined largely by the decisions reached by the Imperial Conference. I

The average rate o£ interest on the total New Zealand public debt of £276,000,000 is 4£ per cent. Over half the amount is held in Great Britain at this rate, and £117,000,000 is held in New Zealand, divided almost equally between Government departments and the public. If the bondholders at Home were to accept lower interest —and it must be borne in mind that the present English.conversion will bring down interest rates —steps might be taken to convert the internal debt as well, thus bringing about an all-round ' reduction. It must also be remembered, however, that the New Zealand taxation of bonds is itself a form of conversion, and that owing to the low average rate of , interest on the public debt general conversion would not effect so much saving as most people seem to think.