Manawatu Evening Standard. THURSDAY, JAN. 17, 1929. LOAN FINANCES.

Manawatu Standard, Volume XLIX, Issue 41, 17 January 1929, Page 6

Manawatu Evening Standard. THURSDAY, JAN. 17, 1929. LOAN FINANCES.

It is but natural that the Govcrnment should be taking credit to itself for the success of the seven million loan Avhich it has been announced is over-subscrib-ed, so far as the cash portion of tlie loan proposals is concerned. Sir Joseph Ward, in the statement lie made to the Press on Friday, however, ignored certain of the factors operating in his favour. The high credit NeAv Zealand enjoys on the London financial market is due more to the policy of Sir Joseph Ward’s predecessors in office than to any action on his own part or that of his colleagues. It is rather amusing, therefore, to find Mr Stalhvorthy, speakingin Christchurch on the same day as Sir Joseph Ward made his statement to the Press, as if he really expected the public to believe that the “nerv spirit” he professes to discern in the country is the outcome of the United Party’s return to office. To ignore, as he does, the really progressive development of the Dominion during the sixteen years or more of the lieform Administration, and to say, as he also says, that “historically only a Liberal Administration has supplied the Dominion Avith that magic touch esesntial to prosperity” is mere balderdash. The Prime Minister and his colleagues are reaping where the Coates Administration has sown. Were proof needed of that it is supplied in Sir Joseph’s reassuring message AAffiich he sent to the London Press on December 20. “I had an opportunity,” he said, “of adA T ising the London Press and the High Commissioner that the rumours applying to the raisingof £70,000,000 in one year were quite untrue.” But the right non. gentleman had made it fairly clear, during- his election campaign, that his proposal Avas to borrow that sum within the next eight or ten years. Ten millions of that money Avas to be applied to the completion of the main trunk lines, and the other £60,000,000 Avas to be lent out to settlers and workers. Sir Joseph claimed that he would get all the money he needed at 4£, and that he would lend it out at 4| per cent., without its costing the country a penny of additional

taxation. As the investor will be receiving-) on Sir Joseph Ward’s own showing, £4 16s 4d per cent, and the underwriting and flotation costs will certainly not be less than those of the 1928 five million loan, it is clear he cannot lend any of that money out at less than 5 or 51 per pent., without incurring a loss. The late Government had obtained authority, under the 1928 Appropriation Act, to raise a Public Works loan of five millions and, during the recent short session, Sir Joseph obtained authority to raise an additional two millions. Mr Downie Stewart, his predecessor at the Treasury, had proposed restricting- borrowing this year to five millions, apart, of course, from the sale over the counter of Treasury bonds and Post Office certificates, etc. His desire was to gradually taper off borrowing from abroad. If we understand Sir Joseph Ward aright he does not intend to limit his 1929 borrowings to the £7,000,000, the cash issue of which is said to be over-sub-scribed) as he indicated on Friday that he proposed to raise another £2,000,000 locally. Plentiful as money is reported to be and, as the banking returns indicate it is, no loan issues are likely to be taken up at less than the current market rates and here again Sir Joseph Ward’s promise, to lend out moneys at the rate of 4f per cent., without loss to the country, is seen to be impossible of fulfilment. The twelve millions of the loans falling due this year, which are being offered for conversion, will (again according to Sir Joseph Ward) return the investor £4 15s 3d,per cent, so that, here again, there is no lowering of interest rates, even were the money available which, of course, it is not, as the conversion loan simply means that the holders of the loan stock which is being- redeemed will only be changing one set of bonds for another set giving them a better return. The casli loan (as it is termed) of seA-en millions has certainly been obtained at a slightly cheaper rate than last year’s five millions, but that would have happened under any circumstances almost, for the country’s credit is certainly on a sounder basis than it Avas in 1912) Avhen Sir James Allen took, over a depleted Treasury, and had to undertake a special mission to London to explain the financial position of the Dominion, and to arrange for a loan to coA 7 er the short dated borrowings of the two Cabinets Avhich preceded the coming into office of the Massey Administration—Sir Joseph Ward’s and the Hon. (now Sir) Thomas Mackenzie’s. It is only fair to a Government that has been so often misrepresented that facts such as these should be recalled.