USEFUL TEST.

Auckland Star, Volume LXXI, Issue 16, 19 January 1940, Page 8

USEFUL TEST.

OF MONEY MARKET.

Large British Conversion

Operation.

STRONG FINANCIAL POSITION. British Official WireloMs. (Received 2 p.m.) RI(JBV, January 18. The large conversion operation announced yesterday, although it has nothing to do with new loans to finance the war, is regarded by the I'ress as* a useful test of conditions in which those new loons must be launched. There is general agreement that the (iovernmeiit was well advised to take Hi ,, opportunity of liquidating the 1924 loan. An to the terms of the conversion. "The Times*," which describes it as a real economy, says that it cannot, of course, be pretended that the new offer does not rely to soni« extent on patriotic sentiment. Such sentiment is a factor in the marked, conditions on which the Government Huh to rely to a greater extent than was done in the laxt war.

It adds it would be unsafe to take the character of the new 2 per cent security as iiny indication of the terms on which further loans will he offered, but it can Iμ? said that this addition to the volume of low-holding Government securities, redeemable at a fairly early date, shrill J not be unwelcome to large financial institution!!, and should be easily digestilili' by them.

The "Daily i 1 ** paid the Government had taken a bold step, which wa« likely to strengthen the whole Imsis of (iovernment Him nee during the war. "Our financial position is sound. There is no need to offer high interest rates to attract new money when the time comes to ask for it," says the "Mail."

The Chancellor of the Kxnhequer. Sir John Simon, announced ve«r.»ulay that the 4.J per cent conversion loan, ifMO-44, would Im> repaid at the earliest opportunity. Formal notice of repayment fin July 1 was therefore gi%en. Holders were offered the alternative of being repaid in cash or by conversion to a new loan, with interest at 2 per cent, repayable in 1043-45.