Severity of Loan Conversion Terms Condemned

Northern Advocate, 29 July 1939, Page 8

Severity of Loan Conversion Terms Condemned

{Special to “Nortnern Advocate ” 3 AUCKLAND, This Day.

Strong condemnation of the terms on which the conversion of the New Zealand loan of £17,000,000 in London has been arranged was expressed today by Professor H. Belshaw, head of the School of Commerce, at the Auckland University College. He regarded, the low. rate of income, 3i per cent, as of no value in comparison with the drastic conditions of repayment imposed on the Dominion. Although market conditions uc the present times were unfavourable for a conversion operation, he did not regard it as necessary or desirable m the interests of the British investors that the terms should be made so severe.

Dozens of public ’phones were put out of action in the West End, and the police intensified their precautions all over Britain as the result of information that last-minute bombings were planned.

The public will be excluded from the House of Parliament in the weekend. A number of detectives has been ordered to be ready to travel on the 8.45 p.m. boat to Holyhead. It is believed that a reserve Fleet destroyer will convey those deported to Dublin. At least 100 have been marked down.

Three men were remanded at Bow Street on charges connected with the King’s Cross explosion, when an Edinburgh doctor was killed and 17 people injured.

As the guarantor, the British Government could have modified the terms, and the fact that it had not done so suggested a desire to influence the policy in New Zealand.

Justifiable Resentment

“There will be justifiable resentment in New Zealand over the hardness of the terms,” said Professor Belshaw. “It is,'true that New Zealand’s credits have been seriously impaired in London ..and that this has been reflected in the price of New Zealand stocks, and it is also true that the conditions arranged reflect uneasiness on the part of big financial interests, but nevertheless the position is that New Zealand has always honoured its obligations in the past, and is likely to do so in the future.

“The Dominions’ policy of import control, coupled with the statement of the Prime Minister and the Minister of Finance, is evidence of a determination to ensure the means by which its obligations will continue to be met.”

It was to be expected, therefore, that the terms of the guarantee by the British Government would have been more generous, he. continued. The worst feature of the terms was the fixing of a limit of five years for the complete repayment of the loan, he said. This was incomprehensible, when considered in conjunction with the protest that New Zealand import control was prejudicial to British manufacturing interests. Tightening of Control. Instead of being able to moderate such control. New Zealand would be compelled to tighten it still further, especially when it was borne in mind that the £9,000,000 of special credits would also have to bo repaid fairly soon. How could the stand taken by the British Treasury be reconciled with the interests of Britain’s export trade and the promotion of Dominion prosperity?

Possible consequences to Now Zealand were increased taxation, increased internal borrowing and inflation peihaps a combination of the three, added Professor Belshaw.