NEW WAR LOAN

Auckland Star, Volume LXXIII, Issue 194, 18 August 1942, Page 6

NEW WAR LOAN

INTEREST ON BONDS

HIGHER YIELD ADVOCATED

(P.A.) DUNEDIN. this day. Commenting on the Government announcement of a new war Joan of £10.000.000. Mr. Downie Stewart said that though the last loan was oversubscribed it was obtained onlv after anVi h ur - se . nt .Pleading and cajoling and by inducing large investors to increase or double their first applications. '

There was plenty of monev awaiting investment and a keen patriotic desire to supply it, and the obvious explanation of the Government need to coax was that it was not willing to pay the market price for the money. its last loan was aneady at a discount, which meant a capital levy on all investors who had to market their war bonds. The Government paid the market price tor all other war material, and whv set up a different standard when it hired money? The market prices led Public 10 expect 3i per cent, but the Government was only willing to pay 3 per cent.

L Mr - Stewart added that the addition of i per cent would not help the large investor, whose income and security taxes perhaps reduced the held to Id/ per cent, but the small investor, who was depending on a slender income, was deeply eoncei ned. No doubt he would respond though knowing he would lose some capital owing to loan depreciation, out he could not continue to do so indefinitely. Mr. Stewart concluded that to encourage thrift these bonds should yield such an interest rate as would hold them at or near par.