ISSUES OF LOANS

Evening Post, Volume CXXVI, Issue 6, 7 July 1938, Page 12

ISSUES OF LOANS

VALUE OF PUBLICITY

"I will not weary you with a parade of statistics," said Lord Camrose, addressing shareholders of the "Financial Times," London, "but you will be interested to know that the total of new money raised in the London market by public subscription last year fell from £217,000,000 to £171,000,000. The figures incorporate British Government and other trustee loans, whose aggregate amount is very large, and whose advertising expenditure are in every case lower than an average industrial issue in which far less money is required. Last year included for instance the British Government loan of £100,000,000, on which £2600 was spent in advertising throughout the country. Actually only about a third was subscribed by the investing public. "In view of the large sums which will have to be raised shortly by the Government, it may be observed in passing that more attention by the authorities to the proven maxim 'It Pays to Advertise' should bear fruit in a considerable lightening of the burden on Government Departments which are called upon to hold that part of the stock not taken up by the public until such time as it can be placed in the market." That the result was not merely an isolated instance, he said, was exemplified by the failure of the £.10,000,000 L.C.C. loan. This loan, though required principally for slum clearance, and therefore one which might have been expected to have a wide popular appeal, was advertised to the extent of approximately £3000, and resulted in a public response' of £450,000, or 4§ per cent. During the war, Lord Camrose continued, the Government found it worth while to advertise its loans on a large scale, and thereby to secure the support of the investing public. Today the amount of money allocated to publicity does not enable this to be done, with a result that in the case of many Government and municipal loans the bulk of the issues remains with the underwriters. This is not a satisfactory state of affairs, and must in due course affect the rate at which these loans can be raised, particularly so having regard to the Government's programme. Eventually it is the investor who takes up the loans, and a. direct appeal to him in the first instance must surely be the more profitable and satisfactory course in the long run