SUCCESS IN LONDON

Evening Post, Volume CVII, Issue 9, 11 January 1929, Page 8

SUCCESS IN LONDON

PURPOSES EXPLAINED

DEVELOPMENTAL WORKS

In the course of a statement today in regard to the New Zealand loan, the cash portion of which (£7,000,000) is reported by cablegram to have been fully subscribed, the Prime Minister (the Eight Hon. Sir Joseph Ward) explains that the money is to be spent in fulfilment of his Public Works and hydro-electric development promises. In order to do so he has had to Increase by £2,000,000 the £5,000,000 which he found the Reform Government hisl proposed to raise, and at tho samo time he decided to increase from £10,000,000 to £12,000,000 the proposed amount of loan 'conversions.. Sir Joseph remarks that the terms of the loan are botter than thoso of tho previous New Zealand loan which broke down the 5 per cent, interest rate, and he also refers to the country's high credit in London.

Sir Joseph Ward said thai until this/ iinorning he had not been in a position 'to make any'public statement regarding the floating of the loan. Those who were familiar with the procedure of raising loans in England were fully aware that the Minister of Finance in this country, or in any other country that was negotiating the underwriting of a loan in England, could not publicly .discuss any details whatever until those who had underwritten the loan had had the fullest opportunity of obtaining 'subscriptions from investors in Lon!don. He had only this morning received by cable the release which the responsibilities of his position required before he did anything here that could .easily prejudice, and in all probability greatly hamper the disposal by the iunderwriters of the £7,000,000 and the 'big responsibility that they had undertaken. "I was in the same position 'during the recent sitting of Parliajxnent," said Sir Joseph, "and it was fyo me a source of intense surprise that 'any -member of Parliament, when I indicated that I could not give- details on .Various points, should deliver speeches land press for information that only a full sense of my responsibilities stop;pcd me from giving. PREVIOUS GOVERNMENT'S LOAN PROPOSALS. "I may now say that when I took office on 13th December, I became !aware o£ the whole position. I was quite aware before taking office of the '■whole of the maturities that had to be (provided for by way of conversion; I had no knowledge whatever of what jtho proposals of the Minister of Finance (my immediate predecessor) were, ("but I found that he had held over his final decision. The proposals that had rbeen made were for a cash loan of !■£ 5,000,000 and conversion of ■ £10,----:,000,000 of tho 1929 maturities, to be made in the present month. The cash 'issue, i.e., the £5,000,000, was to cover up 'to 31st March, 1930. That arrangement meant, therefore, no borrowing in,,L6ndon during the financial year 1929-30. ' . "I came to the conclusion after mature consideration," said Sir Joseph, "reluctantly but definitely, that those proposals would not mee£ the requirements of the country, and I had, as the ■responsibility of financing the country then rested upon me, to make up my mind whether to make a material alteration in the proposals. This I finally 'decided to do—that was, to increase the Amount of cash to £7,000,000 and the amount for conversion to £12,000,000. 'As I came into office pledged to at once iput in hand four important railway, (lines and provide for State advances las well as carry on other works, the (proposition I found existing obviously jgave me some concern, in view of the .policy I had promised the country, and fl had to reconsider my plans as far as iimmediate action was concerned in .'order to assure the railway extension (.proposals and the State Advances to [Settlers. I decided to increase the loan from £5,000,000 to £7,000,000 for public works, including railway construction and improvements, and hydroelectric schemes.

;•' "I may add that I had tentatively Arranged, if required, to obtain an additional £2,000,000 locally, to ensure that Jail purposes that I had publicly laid [down in the policy as submitted to the (country would be provided fo#._ ! STATE OF THE MONEY MARKET.

• "Among many matters that outsiders knd the whole of my critics knew little W nothing of,"'continued' tho Prime Minister, "was the important consideration affecting London borrowing in the jeomihg year, the largo Imperial War Loan conversion of about £2,000,000,000 'to be dealt with, as well as the uncertain effect on London finance of the Changing conditions of tho American /market, which in recent times, as anyone who takes an interest in matters of Jthe kind knows, are very unusual both •in the magnitude and variation, and are ;a great factor nowadays in directly and 'indirectly affecting London- at various ■times.

"The new 4£ per cent, casli loan of £7,000,000 maturing in 1948-1958 is ;beiug issued at £95, which will return [investors about £4 16s 4d per cent, allowing for tho redemption of tho discount on issue over the period of 29 years, as compared with £4 19s 8d in the case of tho last 4J per cent, loan of £5,000,000 issued in May last at £94 10s, maturing in 1947. The £12,000,000 conversion now offered is at £104 5s for every £100 of tho old stock, giving investors a return of approximately £4 15s ■3d per cent, allowing for the redemption of the premium over the period, compared with £4 115s 10s in the case of the £5,000,000 conversion in May last, .when .£lO4 '10s of the new 4J,per cent, stock was offered for every £100. of the old 4J per cent, stock. , "*

LONDON'S CONFIDENCE. "It will be'soon, therefore, that notwithstanding many factors that may have operated adversely, the transaction is comparatively better than tho previous loan, which broke the 5 per cent, rate obtaining in London for some years previously, and it is reasonable to claim that the country's high credit has again merited the confidence of the London market, particularly as tho £7,000,000 cash issuo has been £uljj£ subscribed. That the loan has had a good effect throughout New Zealand is beyond all question, as the,_ communications to me yesterday enthusiastically acclaim. As typical of them, I may add that one large firm said: 'Have cabled London doubling our orders. We feel that there arc prosperous times ahead of New Zealand.'

UNFAIR PRESS CRITICISM. Sir Joseph said he had no comment to make about one or two of the Press criticisms. It had been quito apparent for years that there were some people who put politics before everything and •would apparently be delighted to see a breakdown in great financial operations that directly- affected, and if successful benefited, every class of people in the

country, quite irrespective of their politics. What one did marvel at, he added, was the utter lack of judgment and discernment shown by some who professed to lead or. guide public opinion, and their obvious want of knowledge in taking a' fair view of anything, especially if it emanated from a political opponent. "I took an opportunity in December," ho said, "of advising tho London Press and the High Commissioner that the incorrect rumours about the proposal applying to the raising of £70,000,000 in one year were quite untrue. As a proof that I anticipated any such rumours I cabled on tho 20th December to the London Press a statement of my proposals. As a result the following is a quotation cabled to'mo from the 'Evening Standard,' dated 20th December, one of London's leading journals which published the statement of its own accord—and that is the best answer to erroneous rumours that were circulated at tho time:—

" 'It may be mentioned that it is now accepted by the London market that Sir Joseph Ward, the. new Prime Minister of New Zealand, fully realised the importance to maintain New Zealand credit here, and that he will do nothing which will weaken the high' esteem in which that Dominion's securities avo held .by British investors.' "The successful result of these very important and large transactions indicates clearly that after . my proposals received the scrutiny of the highest London financial authorities, who are tho greatest financial critics in the world, ono need not feel in the least perturbed by some of the party statements that were promulgated here."