NEW ZEALAND’S LOANS

Greymouth Evening Star, 12 January 1929, Page 7

NEW ZEALAND’S LOANS

, SIR J. WARD’S STATEMENT

NEGOTIATIONS OUTLINED -—' . ' (Per Press Association.) WELLINGTON, January 11. In the course of a statement to-day, 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 (Rt. Hon. Sir Joseph Ward) explains that the money is to be spent in fulfilment of his public works and hydroelectric 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 propos. ed to raise. At the same 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 better than those of the 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 said that until this morning he had not been in a position to make any public statement regarding the flotation of the loan. Those who were familiar with the procedure of raising loans in England were fully aware 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 London. He only this morning received by cable a 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 underwriters of £7,000,000, and the big responsibility that they had undertaken. “I was in the same position during tlie recent sitting of Parliament,” said Sir Joseph, “and it was to me a source of intense surprise that any member of Parliament, when I indicated I could not give details on the various points, should deliver speeches and press for information, only a full sense of my responsibilities stopped me from giving.. I may now say that when I took office on December 13, I became aware of the whole position. I was quite aware before taking office of the whole maturities that had to

be provided for by way of conversion. I had no knowledge whatever of what the proposals of the Minister of Finance (my immediate predecessor) were, but I found he had held over his final decision. The proposals that had been made were for a cash loan of £5,000,000 and conversion of £lO,000,000 of 1929 maturities to be made in the present month. The cash issue, i.e„ the £5,000,000, was to cover requirements up to March 31, 1930. That arrangement meant, , therefore, no borrowing in London 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 meet 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 the cash to £7,000,000 and the amount for conversion to £12,000,000. As 1 came into office, pledged to at once put in hand four important railway lines, and provide for State advances as well as carry on other works, the proposition I found existing obviously gave me some concern. In view of the p'olicy I had promised the country, and I had to reconsider my plans as far as immediate action was concerned. In order to assure the railway extension proposals and 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 hydro electric schemes. I may add that I had tentatively arranged if required, to obtain an additional £2,000,000 locally to ensure that all the purposes that 1 had publicly laid down in my policy as submitted to the country would be provided for. “Among the many matters outsiders and the whole of my critics knew little or nothing of,” continued the Prime Minister, “was the important consideration affecting London borrowing in the coming year. A large Imperial war loan conversion of about £2,000,000,000 is to be dealt with, as well as the uncertain effect on London finance of the changing conditions of the American market, which in recent times, as anyone who takes an interest in matters of the kind knows, are very unusual both in magnitude and varia-

tion, and are a great factor nowadays in directly and indirectly affecting London at various times. The new 4J. per cent, cash loan of £7,000,000 maturing in 1948-1958, is being issued at £95, which will return investors about £4/16/4 per cent., allowing for the redemption of rediscount on the issue over a period of 29 years, as compared with £4/19/8 in the case of the last 41 per cent loan of £5,000,000, issued in Mav last, at £94/10/-, maturing in 1947. The £12,000,000 conversion now offered is at £lO4/5/- for every £lOO of old stock giving investors a return of approximately £4 15s 3d per cent., allowing for redemption of premium ove'r the period compared with £4/16/10 in the case of the £5,000,000 conversion in May last, when £lO4/10/- of new 41 per cent, stock was • offered for each £lOO of old 41 per cent, stock. It will be seen therefore, notwithstanding mapy factors that may have operated adversely, the transaction is comparatively better than the 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 the £7,000,000 cash issue has been fully subscribed.

That the loan has had good effect throughout New Zealand is beyond all question as communications to me yesterday enthusiastically acclaim. As typical of them, I may add one large firm is said to have cabled to London, “doubling our orders. We feel there are prosperous times ahead of New Zealand.” Sir Joseph Ward said he had no comment to make about one or two press criticisms. It had been quite apparent for years, there were some people who put politics before everything, and would apparently be de-

lighted'to see a breakdown in the great financial operations that directly affected, and if successful, benefitted 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 then' obvious want of knowledge in taking fair view of anything especially if it emanated from a political opponent. “I took an opportunity in December,” he said, “of advising the London Press and the High Commissioner, that incorrect rumours about the proposal applying to the raising of £70,000,000 in one year were quite, untrue. As proof that I anticipated any such rumours, I cabled on December 20 to the London Press a statement of my proposals. As a result, the following is a quotation cabled to me from the “Evening Standard” dated December 20, one of London’s leading journals, which published a statement of its own accord, and that is the best answer to the erroneous rumours that were circulated at the 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 are held.by British investors.” “The successful result of these very important and large transactions indicate clearly after my proposals had received the scrutiny, of the highest London financial authority, who are the greatest financial critics in the world, that one need not feel in the - least perturbed by Party statements that were promulgated here.” CABINET MEETING WELLINGTON, January 10. The first Cabinet meeting of the New Year has been called by the Prime Minister for Thrsday next, January 17. By that time it is expected that all the Ministers will be in Wellington and Sir Joseph Ward expects that all his colleagues will attend. It is anticipated that matters of policy will be discussed. Apart from that a number of items of Departmental importance are awaiting approval by Cabinet and probably a series of meetings will be required to catch up on the arrears of documents needing attention.

There are now ten of the thirteen Ministers at their offices at the Parliamentary Buildings. The remaining three, the Minister for Internal Affairs (the Hon. Mr. De la Perelle), the Minister for Railways (the Hon. Mr. Tavener), and the Minister for Native Affairs (the Hon. Sir Apirana Ngata), are expected to arrive in the course of a few days.