THE NEW LOAN

Hawera Star, Volume XLVIII, 12 January 1929, Page 5

THE NEW LOAN

ARRANGEMENTS REVIEWED.

STATEMENT BY SIR J. WARD. THE CONVERSION ISSUE. (By Telegraph—Press Association.), WELLINGTON, Jan. 11. Sir Joseph Word, in a statement concerning the loan just floated in London, says, that he was unable to make any announcement until to-day, as it would be unwise publicly to discuss details which would have hampered the underwriters in the big responsibility they had He was surprised that parliamentarians should have pressed for the details that only a full sense of his responsibilities stopped him from giving.

“I may say now that when I took office on December 13 I became aware of the whole of the maturities that had - to be provided for by way of conversion,” said Sir Joseph, but I had no knowledge whatever of what the proposals of tlie Minister of Finance (my immediate predecessor), were. but. I found that lie had held over his final decision. Hie proposals that had been made were for.a cash loan of £o-,000,-000 and the conversion of £10,000,000 of the 1929 maturities to be made in the present month. “The cash issue, that was the £5,000,000 was to oover the requirements 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, 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, and this I finally decided to do. That was to increase the amount of cash to £7,000,000 and the amount for conversion to £12,000,000. PLANS RE-CONSIDERED. “As I 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 m© some concern in view of the policy 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 the 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-elec-tric schemes. “I may add that I had tenatively arranged, if required, to obtain an additional £2,000,000 locally to ensure that all the purposes that I had publicly.laid down in the policy as submitted to the country would be provided for. “Among many matters that Outsiders and the whole of my critics knew little or nothing of was on important consideration affecting London borrowing in the coming year. A large Imperial war loan conversion of about two thousand millions is to be dealt with, and also there is 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 their magnitude and variation, and are a great factor nowadays in directly and indirectly affecting London at various-times, THE TERMS DISCUSSED.

• ‘ ‘The aiew 44 per cent;" cash- loan of £7,000,000, maturing in 1948-1958, is being, issued at £95, which will return investors about £4 16s ~4d peri cent., allowing for the redemption- of _ the discount on the issue over a period' of 29 years, as compared with £4 19s Sd in the case of the last 44 per cent, loan of £5,000,000, issued in May last at £94 10s and maturing in 1987. “The £12,000,000 conversion now offered is at £lO4 5s for every £IOO of the old stock, giving investors a return of approximately ■£4 15is 3d per cent., and allowing for the redemption of the premium over the period, compared with £4 16s 10d in the case of the £5,000,000 conversion in May last, when £lO4 10s of the new 44 -per cent, stock was offered for every £IOO of old 4 per cent, stock.

“It will be seen, therefore; that notwithstanding many 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 t 0 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. Tliat the -loan has had a 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 said: ‘Have cabled from London doubling our orders. We feel that there are prosperous times ahead of New Zealand.” ' Sir Joseph said he had no comment to make about one or two- of the Press i criticisms. It had been quite apparent for years that there were some people who put polities before everything and would apparently be delighted to see a breakdown in the great financial operations that directly affected and, if successful benefited every class of.people in the country, quite irrespective of their politics. Wliat 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 their obvious want of knowledge in taking a fair view of everything, especially if it . emanated from political opponents. “I took an opportunity in December,” continued Sir Joseph, “of a dH s_ in o- the London Press an dthe High Commissioner that incorrect rumours about the proposals applying to the raising of the £70,000,000 in one' year were quite untrue. As proof that I anticipated Any such rumours, 1 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 the statement of its own accord, and that is the nest answer to the erroneous rumours tna „ were circulated at the time: ‘lt may be mentioned that it is now accepted by the London market that. .Sir JpspPn Ward, the new Prime Minister of New Zealand, fully realises. the importance of maintaining her credit here, aim that he will do nothing that will weaken the ~ hio-h esteem in which the Dominion s securities are held by the British mvestol“The successful result of these very important and large transactions indicates clearly, after my proposal had received the scrutiny of the higher London financial , authorities, who. are the cn-eatest financial critics n the iworld, that one need not feel in the least perturbed by some or the party statements that were promulgated here.