AUSTRALIAN LOAN

Manawatu Standard, Volume XLV, Issue 193, 20 July 1925, Page 7

AUSTRALIAN LOAN

COMMENTS IN BRITAIN. REFERENCE TO GOLD STANDARD. (By Electric Telegraph.—Copyright.) LONDON, July 18. The Commonwealth ' loan underwriters have completed their prospectus, which will be advertised on Aionday, the list closing on July 22. The • last instalment will be payable on October 4 A full half year’s interest will be paid on January 1, though three-quarters ot tho total loan will be issued in Now York. City circles here are relieved to learn that the whole transaction will bo arranged through Loudon. It is anticipated that, in accordance with precedent, the Now York portion will eventually be, absorbed by London. The Commonwealth's departure in its loan policy in going to New York for threequarters of its present loan requirements has occupied a conspicuous place in all financial reviews. The London portion of the loan has been well received. It will meet the gill-edged market, which has steadily improved in the last three weeks, under the influence of the Bank of England, the gold position and strong bank returns. Now that the Commonwealth’s arrangements have, taken definite steps, the reasons and influences which brought about tho decision partially to forsake the London market form the basts of innumerable newspaper articles upon London’s general position as lender to the Dominions and Colonies. The tone of the financial writers’ comments upon this subject seems everywhere to vary in accordance with their views upon tho wisdom or otherwise of the recent return to the gold standard. The Nation, for instance, says: “Tho financial press doC3 not seem quite clear as to its attitude toward the Commonwealth’s decision to go to New York. On the one side, it is argued that we have dangerously over lent, bad trade and over high consumption having reduced our capacity to lend abroad.” jha Statist, on the other baud, says: “It is urged that only by lending abroad cun trade be improved. There are many fair-tors tending to cheek over-lending, but the effect of the Trustee Acts has been to enable Colonial Governments, whatever thir •financial records of capacity, to raise money on almost as good terms as Britain. For our part, it seems more important to know whether Australia has been overborrowing than whether we have been overlending.” Other writers emphasise that the return to the gold standara was decided rqx>n with the Dominion’s concurrence and support, and it was probably recognised at the time that it would -necessarily entail limiting London's external lending. The Statist welcomes as a virtue'of the gold standard the fact that it has given a clear indication of how far this country is capable of lending abroad. To the argument- that the embargo on foreign investments and the necessity for tho Commonwealth to go to New York proved that the gold standard had been inimical to the country, the paper replies that the country cannot lend more than it saves, that Britain at present is barely making both ends meet, and that consequently ihe gold standard’s automatic check to over-lending should be welcomed. —A. and N.Z. cable. LOW RATE OF INTEREST. NEW Y’ORK, July 17. The New York Times’.? financial editor, in commenting on the announcement of tho Australian loan, says: “The five, per cent rate obtained may be considered a tribute to the credit and standing of the Commonwealth. It is the first time a foreign loan has been floated in New York at so low a rate of interest since the war. Bankers place the Australian issue in the same category with Canadian bonds, which are regarded as prime securities here. The loan is another evidence of the co-operation between American and British financial interest to maintain stable conditions following on the resumption of the gold standard in Britain, and it is expected to be followed by other British colonial borrowings here, now that the way has been opened." The Times emphasises the commanding position of the United States as a creditor nation since the war.

A number of important banking bouses in New York and a small group throughout the country will be associataed with the Morgan Company in the Australian offering. Both tho Herald and the Tribune say that the feature which is expected to make the Australian bond issue popular with investors is that they are not redeemable in less than 25 years.—A. ancl N.Z. cable.