INTEREST RATES AND GOVERNMENT STOCKS
(To the Editor.)
Shy—ln: view of the report of the Economic Commission,- and bearing in mind that in October last there was a strong feeling that the Government would be forced to come out with a compulsory conversion loan, with a reduction in the rate of interest, it is somewhat illuminating'to turn back and see what the Stock Exchange market, which, is a true barometer pf. the commercial mind, then thought of the possibilities g* such action being taken. In September and October last- New Zealand Government 5Yz per cent. 1936-and 1937 Stock and Bonds were selling freely at from £93 15s to £96, clearly showing that the market was prepared for a reduction; but what happen ed, on \the 23rd-October a circular was issued in "A Personal Message to You from the Minister of Finance," in which he stated:— '
.New Zealand Government Securities. A debenture is a direct, unconditional, and signed promise of the Government of New Zealand to pay on certain dates a specified sum of money •with interest at a specified rate, and payable at specified
dates until the debenture matures.
As a result of this confidence -was restored, and-investors were satisfied to pay up to £100 and slightly over, accepting this definite asesurance from the Minister of Finance that their interest and principal were secure. While up to the present no statement to s ;the contrary has been made by the Minister, in view o£ the recommendations made the market shows some sign of- weakening, and as investors in Government Stock have purchased on the statement of the Minister in' October last as stated above, on which date he must have been aware of the drift in the finances of the country, surely the Government could not go back on that assurance, which would be worse than-repudia-tion. I would ask, therefore, that you publish this letter in justice to many holders of this stock who have invested all their savings therein, and the assurance as given by the Minister of Finance should restore confidence in the Government and its bonds.—l am, etc.,
CONFIDENCE,
INTEREST RATES AND GOVERNMENT STOCKS
Evening Post, Volume CXIII, Issue 57, 8 March 1932, Page 6
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