CONVERSION SCHEME

Evening Post, Volume CXV, Issue 67, 21 March 1933, Page 8

CONVERSION SCHEME

AUSTRALIA'S EXPERIENCE

Tnis morning the Government's conversion scheme passed the £90,000,000 mark. Applications for conversion received yesterday amounted to £2,776,000, and the latest return from the Treasury shows that the total now stands at £90,774,000, representing 79 per cent, of tho internal debt. Dissents so far notified cover only £284,000, or less than one-third of one per cent, of the total conversions.

The beneficial effects of Australia's internal loan conversion, particularly on the prices of Commonwealth stocks, were discussed in an interview today by Senator Massy Greene, head of the Australian trade delegation which is now visiting Wellington. "Both from a national point of view and also from that of the individual investor, nothing but the happiest results have flown from the conversion in Australia," said Senator Greene. "Prom a variety of causes Australia felt the full force of the depression a good deal earlier than New Zealand, and it became abundantly clear early in 1931 that nothing short of heroic measures would save the Commonwealth from a financial debacle of the worst type. How serious the position had become is shown by the fact that before the conversion our 5$ per cent, stocks, due 1941, were quoted on the Australian Stock Exchange at £78 5s 9d.

"It was in these- circumstances, continued the Senator, that a, great national appeal was launched to the bondholders of Australia in which they were invited to agree to a reduction of 22J per cent, in the interest return on thir bonds. Tho response had eclipsed the Government's most sanguine expectations, for out of a total of £557,998,904 something over 97 per cent, of the bondholders converted. It was a magnificent, and up till that time he believed unique, response to a national call for sacrifice.

"Today our four per cent, stocks of various maturities into-which the major -portion of our conversion loan falls, are all well above par and including redemption bought at the market rate yield something less than' 3| per cent. Not only has the bondholder saved his capital intact, but in many cases he is a material gainer on capital account.

"The nation has saved a yearly interest payment of £6,500,000 and with "a. restored credit is able to face the futuro with relative confidence and certainty. One has only to quote the prices of our indicator 5 per cent, stocks in. London, which on September 28, 1931, were £55 15s and today are £106 10s to see that the most discriminating of the money markets of the world not only appreciated, but also approves, the steps that Australia has taken to rehabilitate her credit. The internal bond conversion vras undoubtedly the greatest of these."