Manawatu Evening Standard. FRIDAY, MAY 17, 1929. THE SIXTY MILLIONS POLICY.

Manawatu Standard, Volume XLIX, Issue 142, 17 May 1929, Page 6

Manawatu Evening Standard. FRIDAY, MAY 17, 1929. THE SIXTY MILLIONS POLICY.

Sir JosErn Ward was talking in NeAV Plymouth about his “bad luck.” It Avould be interesting to know just Avhat he meant by that. He was referring to his borroAving proposals and said: “Had it not been for the bad luck I had when I came into office, I believe I would have been able to obtain that money”—he was evidently speaking of the sixty millions he required for State Advances —“and lend it out from the start at per cent. I did the next best thing and got it at 4£ per cent.” Later on, at Napier, he said: “The country Avants a lot of money for the next five or six years” and specifically mentioned the amount — “sixty millions spread over a period of years.” The interest offered on the £7,000,000 loan placed on the London market by Sir Joseph Ward in January was per cent., but it was offered at £95, the discount thus given of five per cent, on every £IOO of stock taken up adding to the cost of the loan, so that, by the time brokerage charges and other flotation expenses are taken into account, the money was only obtained at a trifle under 5 per cent. The loan moreover Avas for public Avorks. Actually, therefore, no money for State advances purposes was obtained at 4£ per cent., and as the Government was selling its own stock “over the counter” at 5£ per cent., which rate Sir Joseph subsequently reduced to 5£ per cent., it is very unlikely moneys were raised in NeAv Zealand at 4A per cent. It must have been within Sir Joseph Ward’s knowledge that the London financiers had plainly inti-; mated, in connection with the 1928 loan, that, while they were prepared to advance within .reason any moneys required for public works purposes, they Avere strongly of the opinion that any moneys the Government proposed to lend to its own people by way of State advances should be raised within the Dominion. Mr Downie Stewart received more than a broad hint that loans on that account would not be acceptable on the London market, and it was his policy to. raise such moneys as were required for advances to settlers and Avorkers

within, the Dominion, and by the sale of debentures issued by the Rural Advances and Intermediate Credit Boards. Sir Joseph’s “bad luck” appears therefore due more to miscalculation on his part than to any difficulties in the situation created for him by his predecessor.

CHEAP MONEY STILL LACKING.

Despite the deficit amounting to close upon £bl)0,l)lK), witn which the financial year ended, there is no lack of money in the country—the banks are reputed to be fiolding something like nine millions awaiting investment — and Sir Joseph stated at Napier that the Advances Department had £1,700,000 lying idle on its hands, that money presumably having been ear-marked for advanced 'to settlers, because Sir Joseph stated that, while applications in the Avorkers’ branch Avere increasing, there were fewer from settlers and the department had this money lying idle. NeAv Zealand cannot go on to the London market again this year as British war loans to the extent of over £1,000,000,000 are falling due in London and must either be paid off or renewed, in the former case necessitating fresh borrowing, which would naturally interfere with the flotation of Dominion loans. It is not anticipated that Sir Joseph Avill experience any. great difficulty in reneAving tfie remaining £12,000,000 of the public debt, due for repayment before the close of the current financial year, but it is evident he cannot look to London for fresh money. It is possible that the right hon. gentleman’s “bad luck’ ’ Avas due to his overlooking the fact that so much of the public debt would require renewal this year. Mr Downie Stewart Avisely tested the market last year by inviting applications for the renewal of loan moneys thus falling due to the extent of £5,000,000, and Sir Joseph, acting on advice from London, suggesting that he should place another £10,000,000 Avorth of stock for reneAval upon the London market, obtained an additional £12,000,000, making £17,000,000 out of the £29,000,000 requiring renewal. It might be suggested, seeing that he himself was responsible for so much of the public debt falling due within the years 1928-1929 and the early- part of 1930, that the “bad luck” of Avliick Sir Joseph complains arises out of his oaa’u action as a former Minister of Finance in arranging that the loans should fall in during that period. If his remai’ks merely referred to the £7,000,000 loan, AA'hich he says he obtained at 41 per cent., it is, to say the least, singular that four months should have been allowed to pass without any reference by Sir Joseph to fiis “bad luck.” As we pointed out the other day in discussing interest rates, it is not at all likely that any material drop in such rates will take place until money is procurable on easier terms than seem likely to prevail for some considerable time to come. Money is actually dearer in New York than it is in London, but borroAvers in the latter market are willing to pay from 5 per cent, upwards and, by the time discounts, etc., are allowed for, the actual return to the investor is probably increased by from 5s to 10s per .cent.