LONG-TERM BORROWING.

New Zealand Herald, Volume LXVIII, Issue 20762, 3 January 1931, Page 5

LONG-TERM BORROWING.

PROSPECTS OF LOWER RATES. DRAG OF 5 PER CENT WAR LOAN. [from oub own correspondent. ] LONDON, Nov. 25. Mr. F. C. Goodenough, chairman of Barclays Bank, and president of the British Bankers' Association, speaking at the annual banquet of the Guild of Freemen at the Guildhall, said he thought the time had arrived when all interested in commerce should bring pressure to bear upon their Governments to deal with the war debts. "If they are not to bo altogether cancelled,'* he said, "at all events they should bo adjusted to a basis varying with the price levels of commodities. This must have the effect of lifting a great burden off the shoulders of the world. Indirectly, England and America and the whole world would gain enormously by some .plan that would deal with the war debts under the altered conditions arising out of the fall in world prices." Turning to our own internal war debt, Mr. Goodenough said that although conditions in the London money market were favourable to Government borrowing, especially long-term borrowing, we were saddled with the burden of the two thousand millions of war loan carrying interest at 5 per cent, per annum, and standing at a figure to yield about 4J per cent. This governed the whole situation in the matter of long-term borrowing. The position was due to the uncertainty as to what would be done with the loan.

Apparently it could only be repaid as a whole, and not piecemeal, and although the final date for repayment was 1947, it might be redeemed at par on the Government giving three months' notice at any time between now and that date. People were, therefore, beginning to wonder what the Government was going to do. This uncertainty had the effect of keeping down the price of the loan, and, indirectly, of keeping down the prices of other Government securities, so that the Government had been prevented from taking full advantage of the monetary position. Mr. Goodenough added that he felt sure it could not be long before some plan for dealing with the war loan was decided upon, and that under proper conditions such a step should have the effect of raising Government credit to a considerably higher level, possibly even to a 3Jj per cent, or 4 per cent, basis. "I think the time has already come for making a determined effort to deal with the burden of war debts. With new markets available, trade and commerce would then be rapidly restored."

TRADE RECIPROCITY.

BUTTER AND ELECTRICITY. AN ENGLISH VIEWPOINT. " The connect ion between butter and electricity," says the Electrical Times and Lighting, " is not at first sight apparent, though butter—the very best fresh—has been used in Stauffer lubricators in days gone by when the, local supply of % r aseline and other oily comestibles had given out. The relationship of butter to electrical machinery, however, is considered by electrical men at the Antipodes to be, very intimate and important. New Zealand is a large exporter of dairy produce, nearly all the milking of cows is done by electric milkers, and the total load represents an astonishing figure in kilowatts. Not long ago the present writer heard some Canadian friends in Toronto waxing indignant at the news that New Zealand was sending butter to Nova Scotia. Now, Canada has just recently increased her tariff against New Zealand butter, the United States and Australia practically exclude it, and the result is that New Zealand looks to Great Britain as her best customer.

The large dairy interests in New Zealand are asking their Primo Minister, Mr. G. W. Forbes, to press for a tariff on foreign dairy produce entering Great Britain in return for an increased preference to British manufactures entering New Zealand. They are anxious to buy nothing but English electrical goods, but they expect a quid pro quo. We have no concern here with the general aspects of the case, but it will be seen that the relationship between butter and electrical goods is a double one. " In the fust place the dairy industry uses our electrical machines to produce their staple commodity; in the second place, even if they produced it by nonelectrical means, they would still give strong preferential treatment to our electrical machinery of every kind in return for favouring their butter. Just at present they are feeling a little resentment against certain other purveyors of electrical machinery who refuse to buy their butter. New Zealand is developing her water powers and establishing new electric generating plant. At present she is buying a lot of electrical material from non-British countries. The student of economics may deduce from these undoubted facts any argument whatsoever that appeals to him. Some good electrical friends in Auckland appear to think that it is of interest to electrical men at Home."

AUSTRALIAN PRODUCE. (Received January 2. 11.45 p.m.) SYDNEY, Jan. 2. The following are to day's quotations on the Sydney produce markets: — Wheat. Not-qnoled. 1 Flour, £B. Bollard, £4 ss. Bran, £3 15s. Potatoes, Tasmanian, £7; West Australian, £l2; Victorian, £lO. Onions, Globes, £lO. Oats, white, 3s 6d; Algerian, 4s. Maize, 4s.