BRITISH LOAN.

Auckland Star, Volume LXIII, Issue 261, 3 November 1932, Page 7

BRITISH LOAN.

BUDGETARY SAVING. Economies Effected Through Conversions. NO MORE TILL 1934. (United P.A.—Electric Telegraph—Copyright) (Received 1 p.m.) LONDON, November 2. The new £300,000,000 loan marks the completion of the Government's conversions allowable at present. No fresh opportunity will be available until 1934, when £156,000,000 of Treasury bonds will mature. The Budgetary saving on the latest conversion will be about £5,500,000. The total savings on the series to date, after allowing for reductions in income tax receipts, is about £30,000,000. Commenting on the new conversion loan the "Financial Times" says: "The terms are rather too favourable to the investor. The Government could have borrowed at a flat 3 per cent. It is well to recall the tremendous change for the better wrought by the National Government in a year. No country, on or off the gold standard, has brought about anything approaching the revival witneesed in Britain. "The foreigner still occasionally hesitates over sterling, especially when such incidents as the miscalled 'hunger marching' are magnified beyond all relation to the facts. Here we know the real strength of the country." The Stock Exchange was. immediately responsive to the conversion announcement. British funds appreciated sharply and sterling rallied similarly. Continental "bears" disappeared, and instead Paris and Amsterdam were keenly buying forward sterling. Political circles expect immediate success for the conversion, rounding off an unparalleled operation and removing the overshadowing influence of large blocks of high-priced Government securities, thereby helping industry to absorb the accumulated banking deposits perhaps at cheaper rates. Commenting on the new conversion loan and other operations during the year "The Times" says: "The savings to the Exchequer, important as they are, do not exhaust the advantages and benefits of conversion. Other countries, particularly the Dominions, have profited from the leadership of the British Government, for they have seen for most a rise in their securities and have been enabled to convert relatively dear loans into exceptionally cheap loans. Municipalities have gained in the same way. "The British Government's action has brought advantages to British industrial and trading companies, which are now able to raise fresh capital more cheaply than it has been possible at any time since the war, as well as renew old capital on appreciably better terms. The lightening of the burden of debtors, whether Governments, corporations or traders, has become one of the most pressing economic problems owing to the fall in price level over the last 12 years, and voluntary cenversion offers the best possible solution." The announcement of the conversion loan issue was received with enthusiasm by the city. Great activity developed in the gilt-edged market on the London Stock Exchange, and although the earlier sharp advances were not fully maintained, quotations remained considerably higher on the balance. War loan, assented, closed at £100 5/, well under the beef.' An increased demand for sterling and an all-round improvement in rates are recorded on the London foreign exchange market.