FINANCING THE LOAN

Evening Post, Volume XCIV, Issue 57, 5 September 1917, Page 6

FINANCING THE LOAN

In announcing in the House of Commons the results of the great British thousand millions Wai Loan, Mr. Bonar Law acknowledged th« help he had received outside the Government service in making it a success in the following words:—"l should like to take this opportunity of saying how completely, in my belief, the banks, with their agencies all over the country, have done their best to stimulate their customers to subscribe to the loan, even at the expense of diminishing their own deposits." What was said then as referring to the banks of the United Kingdom may, it. is believed, be said of the banks of this Dominion. Microcosmic as New Zealand may appear in the field of vision, yet it has its place there, and the six institutions, two of them entirely of New Zealand origin, doing banking business here have, it will be found, materially contributed to the success of this War Loan and its predecessor. The success of the Second War Loan, apart from the patriotic reasons which commended it to the people, is no doubt attributable to the provision of ■ £1,000,000 inscribed stock for payment of death and succession duties; the power to virtually compel subscription to the loan by those well able to do so, for which the sanction of Parliament was asked; the freedom of the income derived from the loan from income, taxation; and the liberal support accorded by the banks to the public to enable it to do its duty by the loan. It is rather too early to obtain a clear view of and to what extent the banks have contributed to the success of the loan, but it is believed to have been considerable in the matter of affording to the public facilities to support the loan. They have probably also " stimulated their customers to subscribe to the loan," to vie Mr. Bonar Law's words. That the effect of this assistance will be to diminish deposits would seem to be inevitable ; but with reasonable prospects of shipping -produce away the present displacement of the money at credit will soon be overcome. What is' not quite so clear is the future rate of interest which will satisfy large investors in view of the heavy taxation which they will have to meet. Incidentally, it may be mentioned, with respect to that portion of the loan set aside for use in payment of death and succession duties, amounting to £1,000,000, that the applications for such inscribed stock will reach to between £2,000,000" and £3,000,000. Presumably this stock will be allocated on a pro rata basis, priority being given to subscribers who have applied. for the ordinary inscribed stock or war bonds.