N.Z. LOAN

Gisborne Times, Volume LXXXIV, Issue 12905, 4 July 1936, Page 5

N.Z. LOAN

HOME PRESS CRITICISM

FURTHER DROP IN VALUE OF STOCKS

MR-SAVAGE. NOT BONDHOLDERS, WILL THINK AGAIN

(U.P.A. by Eleo. Tel. Copyright). (Received July 3, 7.40 p.m.) ‘• .■/.N'M LONDON. June 3. “Mr Savage’s explanation has not resolved the discord aroused by his original overtures which seem indistinguishable from threats”, says the Financial News. “The market certainly finds them synonymous, for yesterday’s collapse in prices was even more violent than Wednesday’s. Mr Savage apparently means business, but we arc. confident it is he, not the bondholders, who will “think again.” No New Zealand politician, least of all a. Labor politician intent on launching ambitious and costly social schemes,, dare face a complete elosuru of the London capital market. Naturally Mr Savage :s asking for relief and, naturally, too. the bondholders will refuse and there we may hope the matter will end.” The Timris city editor says : “There were further declines in ■ the New Zealand issues ranging up to four points. It is not surprising in view of yesterday’s stir that Mr Savage explained his original statement. This should somewhat reassure stockholders as, apparently, it indicated that the original remarks were primarily intended to show supporters of the Government that it aimed at implementing its election pledge. Every debtor is entitled to seek relief from onerous interest by mutual agreement, although he must, furnish proof of inability to. pay interest. There have hitherto been no suggestions that New Zealand was in such a plight. While the particulars provided in connection with the loan of April 30 were distinctly re-assuring, the Minister should be aware that tho more announcement that ho is seeking concessions must disturb, investors’ confidence, has New Zealand’s credit stood exceptionally high. Her stocks were regarded as the best class security, affording great advantages to New Zealand.”

The Daily Mail's city editor says :

“The market anticipated Mr Savage’s qualification, but felt that something further was required to restore confidence.” "A CHILD WILL SEE THAT!” -MORE MONEY SPENT ON INTEREST;, LESS FOR GOODS (Press Association). WELLINGTON, July 3. Commenting further ou the Gove nnient’s attitude towards its overseas obligations, the Prime Minister, in ■an interview, emphasised the point that the more New Zealand paid Britain in the way of interest on loans, the loss New Zealand would he able to pay to Britain for her manufactures. “A child will see: that”, declared Mr Savage. “At a. given time there is only a certain amount of- production "n, New Zealand and we export a large percentage of that and I again **ay emphatically that the more that goeo away in the payment of' interest the less New Zealand will have ior the payment of services given by Britain .It is in Britain’s own interest that there should be common sense reigning in the industrial and financial world. If the interest bill was not as large as it is, the difference would go toi Britain for products of the I'abor of British workmen. By that I mean that there would be a better distribution of the money paid. We have no. desire to side-step our responsibilities either in New Zealand or abroad. The only quesfc'on for consideration is that, of more equitable distribution and that applies to Britain just the same as to New Zealand.”

“A BARGAIN IS A BARGAIN" WHAT xMR SAVAGE DOES NOT APPRECIATE (U.P.A. by Elec. Tel. Copyright). (Received July 3, II p.rn.’> LONDON, July 3. The Financial Times says:— “Mr Savage clearly docs not realise the foundational fact on which all; Stock Exchange business 1 rests, namely, that a bargain is a-bargain. Challenge this and credit immediately wobbles. Air Savage’s viewpoints 'are hopelessly distorted, huv, ing regard to the cheapness of money in the world’s financial centres;. Money yield govern,s prices. When Mr Savage appreciates this important point, the bother he- has aroused will die down. .Holders of New Zealand Government stocks, therefore, need not be frightened by a suggestion which -springs from well-intentioned but dangerous ignorance and which is advanced without due appreciation of.the fact that credit goes hand in hand with a strict regard to the fulfilment of obligators.'’ WOULD IT BE FAIR? WHAT PROFESSOR TOURER SAYS , ( Press. Association.. CHRISTCHURCH, .July 3. ' Arguing that- there was nothing' •now in the- proposal by the Prime Minister -to seek a Tower, vato of interest of New Zealand loans.in London before the duo date of redemption-, Profes-sor * Tocker, Professor of Economics at Canterbury University College, commented ‘to-day on. the pro posal. He emphasised that such loann were contracts not - between Governments but between'-the New . Zealand '"Government and private investors in Britain. -..•-• .I.V : .“The Tenders have fulfilled their part''‘of- the contract' in, handing over the. money”) .sa.id v .Professor looker, “a&l 'thereafter' the h,or rower taken . f-/ .' ■ "■ ' .. .

the risk of a rise or a fall'in prices, if juices fall, then more goods arc needed to find ill's money. l If' it is ■fair for British investors to agree to a reduction of their interest now, i c Would have been ffir over the period between 1918 and 1929 when prices were high, ip - .increase the,,.rates on New :, Zealand overseas loans: raised before the war, when prices w: re lower. He added:’ “It lias always . .been that way in any •such, contract. Had prices for NewrZealand exports risen over recent, years New Zealand would riot' have 'uflercd a .higher interest rat'eV-Is she justified then in asking a- lower ittte-' because prices difiva fallen?” '. • ■ - " ■