Wonderful Success of Conversion

Manawatu Times, Volume LV, Issue 6919, 25 July 1932, Page 7

Wonderful Success of Conversion

High Interest Rates Have Gone

KEY MOVE TO END DEPRESSION United Press Association—By Electric Telegraph—Copyright. Received Sunday, 9.5 p.m. LONDON, July 23.

Confidence in the ultimate triumph ot the conversion scheme lias been strengthened all the week. For this assurance the authorities do not rely on. the dailj announcement of the number of applications, but on indications tending to show the view now taken regarding the future of gilt-edgeds for some time to come. Tho banks have been almost overwhelmed by applications, and an even increased avalancho is expected before July 3.1, the last day of the conversion.

Already over half of the 3,000,000 holders have assented to conversion, and though the total converted has not been published, it is known that the applications already received, including ttiose for big blocks held by the largest financial institutions, cover the bulk of the total holding.

A new development last week has been the number of large firms not only converting their entire holdings, but buying more in the market expressly in order to convert, them.

Financial writers emphasise that, both conversion and purchase for conversion arc sound business propositions, as the chances of the stiffening of money rates are remote.

The Financial News incidentally refers to the fundamental differeneo between the Australian and British schemes, pointing out that under the former holders were asked to make a sacrifice for the good of the State, while here the holders are asked to convert not as a charitable gesture, but as a sound investment, as 31 per cent, or a little better is destined to be the average basis of British Government long-term credit in the future. Abnormal post-war interest rates have gone. Sir Walter Layton, the noted economist, describes the conversion as the key move in tho campaign to end the economic depression. He says tho immense volume of the 5 per cent, war loan lias been a millstono round the neck of British credit. The success of the present conversion makes it possible to reduce interest charges on a considerable part of the remainder of tho national debt, and will have a stimulating effect throughout tho world. Tho Stock Exchange has been quieter for tho past week, but the sectional sagging, as occurring mostly on the foreign market, only emphasised the underlying firmness. Naturally, during the conversion Government funds monopolised investment interest, with much dealing both in Homo and Dominion lines. Particular confidence is being shown, in Australians.

Commentators agree that the substantial advances in the wool sales just closed arc more due to the fillip to international confidence attributable to Lausanne and the British conversion loan than to the actual increase in wool consumption. Neither manufacturers nor spinners have yet received any great influx of orders. There has bjen an improved turnover bv covering previous commitments, but. no substantial autumn season s orders have yet uccn placed.