LOAN INTEREST

Manawatu Standard, Volume LVI, Issue 182, 3 July 1936, Page 10

LOAN INTEREST

REDUCTION PROPOSAL. LONDON PRESS WARNINGS. (United Press Association —By Electric Telegraph.—Copyright.) Received July 2, 11.55 a.m. LONDON, July 1. The Daily Telegraph’s city editor describes as disturbing Hon. W. Nash’s intention to request a reduction of interest on New Zeala.nd loans. This has immediately affected New Zealand stocks, an all-round fall of two points taking j>l aco ? and dealers are widening their quotations. "Well-informed people are of the opinion that the statement was designed ior home consumption and need not be taken too seriously. Nevertheless, such a statement must be detrimental to :;ho Dominion’s credit ill London, which lias recently been high, says the paper. “It is difficult to believe that Mr Nash would ask English bond-hold-ers to curtail their existing rights. It would seriously affect New Zealand s status and jeopardise future borrowings. and conversions. Explanations can probablv be sought in the sphere of local political controversy and nilinstructed popular clamour, and demands that the conversion recently applied to the internal loans should be repeated in London with New Zealand’s overseas debt. Moreover, Australia’s spectacular conversions have greatly impressed the Dominion. It is hoped that Mr Nash wijl have wiser second thoughts before bis arrival. The Times city editor says: It is not surprising that the stock markets are uneasy and quotations lower. It is a pity that New Zealand’s credit should be injured by suggestions to interfere with contractual obligations. The News-Chronicle’s city editor says: When the threatened defaulter is a State or municipality of the British Empire, as happens too frequently nowadays, the city is shocked to the Imperialistic core. Mr Savage s remark is something less than a threat of default, but the possibility of default following the bond-holders refusal seemed sufficiently near to justify a heavy fall in the price of stocks. Longer-dated loans all fell three points Mr Savage will avoid disappointment if he realises that there is no possibility of the bond-holders acceding to his request. The added cost of the debt service is due to New Zealand deliberately and without Australia s urgent necessity-, depreciating the value ot her currency. New Zealand i\as. no asked to pay unduly high rates m hen the loans were raised and she lias always enjoyed the substantial pieieience- accorded to Dominion borrowers, probably 1 per cent.