Mr Nash Returns

Press, Volume LXXV, Issue 22805, 2 September 1939, Page 14

Mr Nash Returns

In a statement to the press, issued on his arrival in New Zealand yesterday, the Minister for Finance generally surveyed the results of his mission to England. Little was to be learned from his comments; and it was not to be expected that he would say more. Full and proper opportunities will soon be open to him. But it is not untimely, perhaps, to point out that the public and Parliament have for weeks, now, been forced to be content with a very imperfect explanation of the trade and financial arrangements; and although the Minister for Finance may have been wise to reserve to himself, and until his return, the responsibility of a detailed account and defence of them, his choice makes it all the more necessary that he should lose no time and spare no pains now. For example, the conversion operation, an unusually complex one, requires much more illumination. Mr Nash said yesterday that, while the terms might be considered “ difficult,” the rate of interest and the price of issue had been “favourable.” The distinction's not easy to follow; the rate and the price of issue cannot be reasonably considered apart from the terms. It is in their connexion, in fact, as we showed recently, that the true cost of the loan appears, and appears disturbingly high. The difficulties to which Mr Nash refers are narrowly those of meeting the half-yearly capital repayments, plus interest, in addition to all ftther debt service charges, before importation of goods can be financed. But there is a further point, upon which little or nothing has been said, though it may prove to be very important. This arises in the provision that, in each half year, holders of the 1945 loan will have the Option to convert into 3i per cent, long-term stock, half 1949-54, half 1955-60 at “ rates to be published from time to time. It is obvious that the burden of such a further conversion must depend on the rate at which the stock is issued;, but what is frequently overlooked is that the practice of issuing stocks below par, though attractive, disguises the cost of the operation. Even slight abatements transform the nominal price of the money into an effectually heavy one. The Minister should therefore throw as much light as possible on his intentions in regard to these forthcoming transactions. It would be dangerous and fallacious to attempt to escape or mitighte the transfer difficulties he mentions by effecting reconversions-at a'liberal discount.