Money from America

Hawke's Bay Tribune, Volume XI, Issue 238, 12 October 1921, Page 5

Money from America

THE QUEENSLAND LOAN. ISSUED ON DOLLAR BASIS. UPSETTING THE EXCHANGE. [By Cable—Press Association.—Copyright.] London, Oct. 10. American advices received in London state that the Queensland loan was issued at the minimum price of £99, less 1| per cent. The brokerage on the loan works out at £7 7s 4d per cent. It is repayable in 20 equal annual instalments. Repayment after tho first five years must be at the rate of £lO2 10s per cent. A high financial- authority points out that so far from stabilising the exchange the loan will have the opposite effect, because, calculating discount, interest, brokerage, and other charges, besides annual repayments at a premium, Queensland will return £250 lor every £lOO received.

The “Morning Post” says it is surprising that Queensland’s borrowing should be denied officially when the issuers are actually offering the bonds for subscription. Equally curious is the claim that the loan was issued on a dollar basis in order to obtain the advantage on exchange, as the Government will convert the loan into pounds sterling. The loan will cost the borrowers 7.2 per cent, and must be paid in dollars whatever their price. The only possible advantage will be that derived from the recovery of the American exchange, which will reduce the annual interest and lessen the cost of repayment. It is equally possible that the exchange may fall. No British colony has yet paid seven per cent, for a loan from Britain. Meanwhile the firmness of the American exchange is a disadvantage to Queensland as regards the meeting of London liabilities.—(A. and N.Z.)