CHEAP MONEY-RAISING

Evening Post, Volume XCIV, Issue 48, 25 August 1917, Page 6

CHEAP MONEY-RAISING

The flotation in London of a Commonwealth loan of £4,500,000, to which the cables refer, has been a success in so far as its . underwriting is concerned. In other words, the money required has been found, not at the moment by the public at large, but by a group of financiers who do underwriting business. What their charges are the cablegram does not disclose. 1 Flotation and underwriting charges of a Government loan do not look much when expressed in percentage terms, but with a big loan, say for several millions, they reach an enormous sum in the aggregate. Just before the'war ]Slew > Zealand paid for floating its loans in London an average of 3£ per 'cent., that is, £3 10s for every £100. But when the Government decided to raise its £2,000,000 for public -works and its £8,000,000 loan for war purposes from within the Dominion, it did so at an average cost'of 7s 6d per £100. This wide difference in coat is so apparent that it requires no comment; but if not exceeded 7s 6d per cent, represents an enormous saving to the Dominion on a total subscription of £25,000,000—taking it for granted that the Second War Loan for £12,000,000 will be fully if not oversubscribed, as it ought to be. The advantage of meeting the Dominion's financial requirements from its own resources cannot be overestimated. Not only with these war loans will much of the money be circulated in New Zealand, and much go in payment of our soldiers abroad and at home; but the interest will be distributed within the country.; and instead of the further enrichment of financial firms who make it their exceedingly lucrative business to ensure success of Government loans, the work is to be done by ourselves at 7s 5d in the £100, instead of £3 10s in £100. The war has brought many evils in its train, but it has certainly tended to make New Zealand financially self-reliant, and to some extent realised the dream of many in the past, that the Dominion should, as far as possible, do its own financing.