The Press THURSDAY, OCTOBER 5, 1933. The Government and Conversion

Press, Volume LXIX, Issue 20978, 5 October 1933, Page 8

The Press THURSDAY, OCTOBER 5, 1933. The Government and Conversion

The announcement in the cable news yesterday that the New Zealand conversion loan of £5,000,000 at 3j per cent, had been underwritten will make the public anxious to hear more about the Government's conversion plans for the future. What it has heard has not been either reassuring or definite. Indeed, there is still some doubt as to the amounts maturing in the next lew years, a doubt which the Government should lose no time in removing. On his return from the World Economic Conference the Prime Minister indicated that the arrangements for the present conversion were in hand. But he made it clear that he did not regard the question of future conversions as of any immediate importance. "If commodity prices " improve sufficiently," he said, " and there is already every indication that they are on the up- " grade, we would be able to pay " our way and the same need for "a general conversion would not " exist." In this statement the Prime Minister makes at least two unwarranted assumptions. The first is that export prices are likely to • rise in the near future to a level which will bring the interest bill into a normal relationship with the national income. There is little in present indications, encouraging as they are, to justify such optimism. The second assumption is that the general lowering of interest rates during the depression is. no more than a measure of temporary relief to debtors. No doubt some interest reductions have been conceded as alternatives to default; but it seems almost certain that one result of the depression will be a permanent lowering of rates of interest, There is therefore no question of New Zealand's ability or inability to " pay her way." Rather is it a question whether she ought to carry an interest burden which, in the light of financial conditions generally, is' unnecessarily heavy. There is the further consideration that the Government has virtually forced holders of its stock in New Zealand to accept lower rates of interest. In justice to them it should convert its external indebtedness if there is any reasonable prospect of doing'so.