WAR LOAN ISSUE

Gisborne Herald, Volume LXIX, Issue 20865, 18 August 1942, Page 2

WAR LOAN ISSUE

RATES OF INTEREST EFFECT ON INVESTORS MR. STEWART CRITICAL (P.A.) DUNEDIN, this day. Commenting on the Government announcement of the new war loan of £10,000,000, Mr W. Downie Stewart said that though the last loan was over-subscribed, it was obtained only after much urgent pleading and cajoling and by inducing large investors to increase or double their first applications. There was plenty of money awaiting investment and a keen patriotic desire lo supply it, and the obvious explanation of the Government need to coax was that it was not willing to oay the market price for the money. Its last loan was already at a discount, which meant a capital levy on all investors who had to market their war bonds.

The Government paid the market price for all other war materials and why set up a different standard when it hired money. Market prices led the public to expect 3J per cent., but the Government was only willing to pay 3 per cent. Mr Stewart added that the addition of k per cent, would not help the large investor, whose income and security taxes perhaps reduced the yield to 15s per cent, but the small investor, who was depending on a slender .income, was deeply concerned. No doubt he would respond, though knowing he would lose some capital owing to loan depreciation, but he could not continue to do so indefinitely.

Mr Stewart concluded that to encourage thrift, these bonds should yield such an interest rate as could keep them at or near par.