NATIONAL WAR BONDS.

Lyttelton Times, Volume CXVII, Issue 17646, 26 November 1917, Page 4

NATIONAL WAR BONDS.

Tire plea that we entered on Saturday for the, initiation of a national policy of war saving may be reinforced to-day by a brief reference to the latest system of war borrowing adopted in the Mother Country. Exchequer bonds, having a currency of five years, have always boon* on sals at Home, just as war loan certificates may bo purchased hero, but the British authorities came to'rfJho conclusion that a system of continuous ,bor rawing on an extended scab was needed to meet the desires of both "large and small investors. It had been urged that tho efforts to popularise subscriptions to tho war loans had bc.cn too spasmodic, and that while tho War Savings Committee, with associations throughout the country, was doing a great deal to reach the smallest investors, tho well-to-do were neglected until tho time should come for the issue of a las-go loan. This complaint .will no longer be valid- Th 0 Imperial Government now issues National' War Bonds of four classes, three of them bearing interest at o per cent and the fourth at 4 per cent, free of ordinary income tax. There is no limit to the amoun't of subscription, bonds from £5 to £SO being issued through the Post Office and those of higher value by tho Treasury. The subscriber may take up the 3 per cent bonds repayable in five years a* 102 per cent, or bonds for seven years repayable at 103, or bonds for ten years repayable at 105. Tho "income tax compounded'' bond has the ;fixed term of iten years and is repayable at par. The only complaint that is mi>I 0 by tho financial criticsconcerning this new system is thaitl tthc-» terms are too attractive, and it should impress our own financial, authorities that in freeing orte class of bond from incomo tax liability the Imperial Treasury expressly provides that interest on the bonds remains subject to super-tax, and that their period is limited to ten years. Tho new system of borrowing' was adopted with the intention of encouraging peoplo who have money available to lend it to the State immediately it becomes free. Tho "Economist," in the course of an analysis of war borrowing a few weeks ago, came deliberately to tho conclusion that tho great figures of the British achievement were largely misleading, that genuiuo saving has had a minor place, and that borrowing abroad and the use of the machinery of credit have been the most important elements of British war finance of late. With that aspect of the question we are perhaps not very intimately concerned in New Zealand, but the point the "Economist" makes, that there is still vast! room for tho encouragement of real saving, is obviously applicable to this Dominion. Expenditure on luxuries, extravagance that would be scarcely excusable even in the piping times of peace, goes on unchecked. People still imagine that the only way to deal with money is to spend it. The idea that every penny contributed to war loans helps to win tho war has never been grasped. Saving has never been popularised, and the appeals of tho Finance Minister for subscriptions to the war loans have simply not' touched tho great mass of the peoplo. There is not tho slightest reason why the system of continuous borrowing should ho adopted in this country, or why a continuous campaign of education in the necessity for saving should not bo carried on at tho same time. It needs only the initiative of the Government to set such a movement! in progress, and, as we showed on Saturday, a model for 6iich a movement is to bo found in the National Savings Associations in tho Mother Country.