N.Z. WAR LOAN

Press, Volume LXXVIII, Issue 23719, 18 August 1942, Page 4

N.Z. WAR LOAN

INCREASE IN INTEREST, | ADVOCATED ; HON. DOWNIE STEWART’S |- OPINION -'A (P S.S.) DUNEDIN, August 17. -; The Hon. W. Downie Stewart, ister of Finance in the Coalition GoV. u ernment, commented to-day on ttie I cent annourtcement that a newloan of £10,000.000 would issued to the public and that the teraw of the loan would be made known the last loan of was raised, it was oversubscribed, bfiS. of publicity, or by inducing vestorS to double or increase the a^i iC S S 'not a lesson to belM™g'f money awaiting investment, and tn«r» - h , is a keen patriotic desire to supply roe Government with the funds_ necessary to carry on the war. The obvious ex-, planation is that the Government'l*. not willing to pay the market price for money. Its last loan is already at ; a discount. This means, in , e “ ec Vr ... , capital levy on all those investorsi wM . for oi\e reason or another have to sen v. war bonds in the market, . "The Government pays the market price for all other war material, such as steel, cement," and foodstuffs, wny , should it set a different standard when it sets out to hire money? Market prices show that the public Government loans to yield 3* cent,, whereas the Government so tar is only willing to pay 3 1 per cent. “I am not thinking of the large vestors, whose income tax and social security tax reduce the yield of tneir 3 per cent, investments to perhaps XWj for each £IOO. An addition of J,P« cent, on Government loans is of httie , help to them, in any case, hut the small thrifty investor, dependent on a slender income for a livelihood, J» deeply concerned. No doubt tms thrifty person will respond on pawi* otic grounds as far as he can, even though he knows he will lose some oi his . capital owing to depreciation oi the loan, but he cannot continue to do so for further loans indefinitely. "This investor,” Mr Stewart continued, “is of immense value to tne Government, although a few years ago his habits of thrift were jeered at as out of date and mischievous. , "If Australia, which is a larger and wealthier country than New Zealand, finds it possible and advisable to one 3i per cent, can New Zealand expect j to pay only 3 per cent? Muchofthe .. money awaiting investment is held oy . trustees, who must do the best tney . can for their clients. It is surely uh* . wise to force them to seek trust in vestments that yiehjl more than Gov ernment bonds. To encourage thrift the bonds should yield such a rate or interest as will keep them at par or as near par as possible. It is in the Gov „ ernment interest to. secure this result, , otherwise the flotation of future loan. is prejudiced and Government crern • • depreciated.”