“RUNNING TAP.”

Manawatu Standard, Volume XLVI, Issue 107, 6 April 1926, Page 7

“RUNNING TAP.”

DOMINION LOANS.

RESTRICTION ADVOCATED

LONDON, March 24. Tho drastic restriction of fresh trustee stocks, including overseas borrowing, was suggested by Mr Stanley Machin (president of the Association of British Chambers of Commerce) at that body’s annual dinner. Tho Government’s first duty, he said, was to reduce .taxation. Ho pointed out that £20,060,000 could be saved by the conversion of £2000,000,000 5 per cent, war loans into 4 per cents. The Government has the right, after 1928, to repay the loans or to convert them, but the latter is impossible while the 3£ per cent, war loan is below £9O, and the latter price is prevented frohi rising owing to the flood of new issues in recent years.

“This continually, running tap,” he said, “swamps the 3J per cent, loan, and should be turned off. Is it prudent to invest British trust funds in long-term Australian issues? Britain has no control over the finances and budgets of Australian States, which are being entrusted with the funds' of British widows and orphans and others.” INFORMATION WANTED. Some Australian States, ho continued, when issuing prospectuses, do not furnish vital information, for example, as to whether they are balancing their budgets, what is the per capita debt, and what proportion of loan expenditure is reproductive. Investors in future should insist on such information. The public constantly was told that overseas borrowing meant tho export of British goods and services, but this'was only partially true. It did not apply to relnewals or to loans raised to" pay interest on an existing debt. Such issues compete with British Government stocks, depreciate the value of the 3J per cent, war loan, and hinder the reduction of the income tax, which is industry’s prime necessity.