FEDERAL LOAN.

Auckland Star, Volume LXVI, Issue 307, 28 December 1935, Page 10

FEDERAL LOAN.

£7,800,000 RAISED.

INTEREST OVER 3| PER CENT.

SPECIAL INDUCEMENTS,

(From Our Own Correspondent.)

SYDNEY, December 19,

A good deal of interest has been taken in Sydney in the flotation of the latest Federal loan. It may be remembered that the previous flotation was not particularly successful, a considerable nroportion of the issue being left on the underwriters' hands. It was felt, therefore, that the manner in which the loan was received would be to some extent an indication of the state of our money market, and at the same time a measure of the Commonwealth's credit and financial prestige. Judged from these standpoints, the flotation was a matter of national interest, and it is satisfactory to know that everything has passed oil' Successfully.

It may be remembered that the rate of interest offered was rather higher than before, and with the discount on the face value of the scrip will give a return of a little over 3| per cent. This while by no means extravagant is, under present conditions, a fairly attractive investment. But there were several special inducements which, apart from' the actual rate of return, made this issue decidedly popular. The loan is free of State income tax; it will not be subject to the special Federal tax on property income; and will not be subject to any future Federal taxation in excess of the limit marked by' the Act of 1930. Subscriptions by Instalment. •To facilitate the flotation in the interests of small financiers an arrangement was made for the payment of subscriptions by instalment —10 per cent down, 15 per cent in January and February, 25 per cent in March and April, the balance in May. Each instalment as it is paid in will bear interest; but the object of the arrangement is; to enable small subscribers whose money js at interest in savings banks or trading banks to draw their interest in full without loss through breaking into a period.

These rather elaborate inducements may suggest that the Federal Treasury was extremely anxious to. make sure that this flotation should be more successful than its predecessor. At tlw same time Mr. Casey in a special appeal addressed from Canberra pointed out that the money raised was to be expended on public works which would give direct employment, and indirectly would provide work for suppliers of materials and would stimulate business generally. Nor did the Treasurer forget the primary producers, who were reminded that some of this money wauld be used on the promised adjustment of their debts and would at the same time ''enable efficient farmers to resume normal consumption of the products of secondary industry/' Hall Mark of Success. These appeals, multifarious as they were, certainly had the desired effect, and a week before the date fixed for closing the loan it was officially announced that the amount required— £7,500,000 —had been over-subscribed. The authorities, however, decided to accept the whoie amount offered— £7,800,000—50 that all applicants can be satisfied. The Federal Treasurer should be glad to receive this distinct intimation that there is plenty of money available for investment now on sound security at even a comparatively low rate of interest; and bankers and investors alike have the satisfaction of knowing that this little operation has been completed successfully without .producing any local stringency or tightening Up the conditions for legitimate industrial and commercial enterprises.