FINANCE FOR DOMINION.

New Zealand Herald, Volume LXVI, Issue 20152, 12 January 1929, Page 12

FINANCE FOR DOMINION.

THE LATEST TRANSACTIONS. CONFIDENCE IN NEW ZEALAND PROVISION FOR 1929-30. - STATEMENT BY PRIME MINISTER. [BY TELEGRAPH. —PRESS ASSOCIATION.] WELLINGTON. Friday. The Prime Minister, Sir Joseph Ward, in a statement concerning the loan just floated, says he had been unable to make any announcement until to-day, as it would have been unwise publicly to discuss the details, which would have hampered the underwriters in the bif? responsibility they had undertaken. "I may now say that when I took office on December 13 I became aware of the whole position. I was quite aware before taking office of the whole ot the maturities that had to bo provided for by way of conversion, but I had no knowledge whatever of what the proposals of the Minister of Finance (mv immediate prcdeces sor) were. I found, however, that lie had held over his final decision on the proposals that had been made, which were for a cash loan of £5.000,000, and conversion loan of £10,000,000 of 1929 maturities. to be made in the present month. Increased Amount of Loan. "The cash issue, that was, £5,000,000, was to cover requirements up to March 31, 1930. That arrangement meant, therefore, no borrowing in London during the financial year 1929-30. 1 came to the conclusion after mature consideration, reluctantly but definitely, that those proposals u'ould not meet the requirements of the country, and 1 had, as the responsibility of financing the country then rested upon me, to make up my mind whether to make a material alteration in the proposals, and this I finally decided to do. That was to increase the amount of cash to £7,000,000, and the amount lor conversion to £12,000,000. As 1 came into office pledged to put in hand at once four important railway lines, and provide for State advances, as well as to carry on other works, the proposition I found existing obviously gave me some concern, in view of the policy I had promised the country, and I had to reconsider my plans so far as immediate action was concerned. In order to assure my railway extension proposals and State advances to settlers, I decided to increase the loan from £5.000.000 to £7,000.000 for public works, including railway construction and improvements and hydro-electric schemes. I may add that I had tentatively arranged, if required, to obtain an additional £2.000,000 locally, to ensure that all purposes that 1 had publicly laid down in my policy, as submitted to the country, would be provided for. State of London Market. "Among many matters that outsiders and tho whole "of my critics knew little or nothing of, was an important consideration affecting London borrowing in the coming year. An Imperial war loan conversion of about £2.000.000,000 had to be dealt with, as well as the uncertain effect on the London finance of changing conditions of the American market which, in recent times, as anyone who takes an interest in matters of the kind knows, are very unusual both in their magnitude and variation, and are a great factor nowadays in directly and indirectly affecting London at various times. "A new per cent, cash loan of £7.000,000. maturing in 1948-1958, is being issued at £95, which will return investors about £4 16s 4d per cent., allowing for redemption of discount on tho issue over a period of 29 years, as compared with £4 19s 8d in of the last 4J> per cent., loan of £5,000.000, issued in May last at £94 10s. maturing in 1947. The £12,000,000 conversion now offered is at £lO4 5s for every £IOO of old stock, giving investors a return of approximately £4 15s 3d per cent., allowing for redemption of premium over the period, compared with £4 16s lOd in the case of the £5.000.000 conversion in May last, when £lO4 10s of the new 4J, per cent, stock was offered for every £IOO of old 4 per cent, stock. "It will be seen, therefore, that notwithstanding many factors that may have operated adversely tho transaction is comparatively better than previous loans, which broke tho 5 per cent, rate obtaining in London for some years previously, and it. is reasonable to claim that the country s high credit has again merited the confidence of the London market, particularly as the £7.000.000 cash issued has been Lilly subscribed." Indifferent to Criticism. Sir Joseph said ho had no comment to make about one or two of the press criticisms. It had been quite apparent for years that there were some people who put politics before everything, and would apparently lie delighted to see a breakdown in great financial operations that directly affected, and, if successful, benefited every class of people m the country, quite irrespective of their politics. What one did marvel at, ho added, was the utter lack of judgment and discernment shown by some who professed to lead or guide public opinion and their failure to take a fair view of anything, especially if it emanated from a political opponent." "I took an opportunity in December," he said, "of advising tho London press and the High Commissioner that rumours about a proposal applying to the raising of £70,000,000 in ono year were quite untrue. I cabled on December 20 to the London press a statement of my proposals. As- a result tho following is a quotation cabled to me from tho Evening Standard, dated December 20, one of London's leading journals, which published the statement of its own accord, and that is the best answer to erroneous rumours that were circulated at the time:— " ' It may be mentioned that it is now accepted by tho London market that Sir Joseph Ward, tho new Prime Minister of New Zealand, fully realised the importance of maintaining New Zealand credit here, and that he will do nothing which will weaken the high esteem in which that Dominion's securities are held by British investors.' "The successful result of these very important and large transactions after my proposals received the scrutiny of the highest London financial authorities, who are tho greatest financial critics in the world, indicates clearly that ono need not i'eel in the least. perturbed by some of the party statements that were promulgated here." SUCCESS OF NEW LOAN. AMOUNT OVER-SUBSCRIBED. Australian and N.Z, Press Associntion. LONDON, Jan. 10. The subscription lists for the New Zealand loan of £7,000,000 have closed. The issue was over-subscribed. The prospectus of tho loan was issued on Wednesday and the closing date for cash subscriptions was yesterday, so that the list was evidently tilled on the first day. Tho conversion part of tho loan, an invitation to holders of 4 per cent, stock up to £12,000,000 to exchange it for the new 1948-58 stock, is open for application until January 26^.