DEBT CONVERSION

Northern Advocate, 7 November 1932, Page 5

DEBT CONVERSION

UNPRECEDENTED EASE BRITAIN’S FISCAL STABILITY. HALT FOR 13 MONTHS. (United Press Association— By Electric Telegraph.—Copyright.) (Received 10 a.m.) LONDON, November 6. There is no parallel in tho financial records of any country to the ease with which the Treasury placed the loan of £300,000,000, crowning a stupendous series of operations by which nearly 37 per cent ol Britain’s Internal debt was converted, transferring a large proportion from tho unfunded to the funded category. Tho annual gross interest bill will be reduced from £117,500,000 to £<0,000,000. Tho net saving, allowed for tho reduced receipts from income tax, cannot be under £30,000,000. The Treasury can now rest for at least 18 months before other maturities calling for further obligations, arise. The “Financial News’’ expresses the opinion that a grateful nation will not. be niggardly with K.B.E.’s, or even baronies. Nevertheless the Government’s chief adjutant was “General Depression’’ assuring a sterile glut of idle funds. Bad trade remains, despite tho conversion, for which it h hoped the Government will bring positive proposals to the World Economic Conference which unhappily will not be held until the spring. It is anticipated that the Preparatory Committee will sit in three weeks and adjourn until January, delaying the full conference. Stock Exchange Reflex. The .Stock Exchange is uncertain in following the conversion. A turn from long to short-dated stocks and a move towards industrial stocks were observable. There is a belief that giltedgeds have now reached the top prices and the reinvestment of gilt-edged profits is likely to provide a fair market turnover for a considerable period. Indices show that one unit of giltedged is now worth approximately two units of industrials. The authorities are reported to be preparing for the repayment of the American debt in December. This amounts to £30,000,000, and at the present rate of exchange is equivalent to approximately two years’ British exports to America. The present level of Britain’s adverse balance of trade with America, exclusive of debts, is estimated at £35,000,000. Consequently tho debt must, bo paid from the Exchange Equalisation Fund, Weakening the control of exchange. Speculators Active. Nevertheless the budgetary embarrassment of France and the United States is encouraging “bullish’’ speculators. “The Statist” says that when the seasonal pressure on sterling decreases it may bo difficult to prevent, a. substantial appreciation. Groups of leading manufacturers in Britain are pressing the Government to force the Empire lead producers to supply products at prices ensuring a continuance of manufacturers’ high profits, which for years have restricted the consumption of the metal. It is learned authoritatively that the Empire producers prefer free trade in lead to a system under which they (the producers) will bo compelled to supply tho manufacturer at their own figure.