LOANS COMPARED

Evening Post, Volume CII, Issue 49, 26 August 1921, Page 8

LOANS COMPARED

GOVERNMENT AND SOUTHLAND;

ISSUES,

The attention of the Hon. W. Downie Stewart was drawn to-day to a newspaper article dealing with the ' flotation of 1 the Southland Power Board's loan, in which comparisons were made between the flotation of this loan and of the Government loan of £5,000,000 in July.. The article alleged that the government loan was floated on a slightly more favourable market, and that, despite this, the Southland loan will make a slightly better showing when the ' details ,'of the transaction are published. It was further stated that the Government loan had all the prestige of. the Government behind it, while the Southland loan was a local one, and.owed its success to the financial ability of Sir Joseph Ward: "These statements," said Mr. W. Stewart, "are somewhat astounding when the facts are investigated; At the time when the New Zealand loan ,prospectus w.as issued' on 37th . June, .1921/ the Bank, of (England; rate was 6 per cent., and the rate for weekly loans from 4$ to 5. per cent. The Banfc of England rate now is 5j per cent., and the weekly loan rate 4 pev cent., so that the statement that the earlier loan had a slightly more favourable market to face is obviously incorrect. Furthermore, Sir Joseph Ward ,was credited about two years ago with having arranged in London for the .issuing of the Southland loan, but money was not forthcoming, and, in consequence, the Government had to come to the financial assistance of the Southland • Board to: a very large amount to enable it to meet commitments and carry on. j Again, in April last it was believed that the . Southland loan had been successfully arranged for, but it did not eventuate, although Auckland City got its half million at that time. The, real factor is; that the present) success of the loan is' to be attributed to it being guaranteed by the Government, and that it therefore ranks practically as an equally good investment as a Government loan. It is in these times impossible to forecast the course of the London money market for even a few weeks ahead—as the Government loan wa.s issued by the Bank of England, ; t is for the public to judge whether the authorities of that institution or Sir Joseph Ward are in the- better position to know the conditions and prospecte of the money market."