CUT IN INTEREST

Grey River Argus, 20 January 1940, Page 8

CUT IN INTEREST

British War Borrowing 4} TO 2 PER CENT. RUGBY, January 18. The large conversion operation announced yesterday, when interest was reduced from 4i to 2 per cent., is regarded by the Press as a useful test of the conditions in which new loans must be launched. There is general agreement that the Government is well advised to take the opportunity of liquidating'the 1924 loan. As to the terms of the conversion. “The Times,” which describes it as real economy, says that it cannot, of course, be pretended that the new offer does not rely to some extent on patriotic sentiment. Such sentiment is a factor in market conditions on which the Government has to rely to a greater extent than was done in the last war. It adds that it wou’d be unsafe to take the character of the new two per cent, security as any indication of' the terms on which further loans will be offered, but it can be said that this addition to the volume of low holding Government securities, redeemable at a fairlyearly date, should not be unwelcome to large financial institutions, and should be easily digestible by them. The “Daily Mail” said: The Government has taken a bold step, which is likely to strengthen the whole basis of Government finance during the war. Our financial position is sound. There is no need to offer high interest rates to attract new, money, when the time comes to ask j for it.