WAR LOAN CONVERSION.

New Zealand Herald, Volume LXVIII, Issue 20982, 19 September 1931, Page 11

WAR LOAN CONVERSION.

FORMAL AUTHORITY. CONCESSION TO FOREIGNERS. British Wireless. RUGBY, Sept. 17. A resolution, proposed by the Chancellor of the Exchequer, empowering the Treasury to take certain action in the j •went of conversion of tho 5 per cent. | war loan, was passed by tlio House of Commons in Committee. Mr. Snowden slated the Government would not consider a conversion scheme j which would not realise a substantial! saving of interest to the. Exchequer. »■ Powers were taken in the resolution, but would not necessarily bo exercised. I to exempt from British taxation con- j version stock held by foreigners and to ! continue the practice of not deducting j tax at the source. One of the difficulties confronting the conversion of this stock is that a large amount is heiil abroad, its popularity with foreigners being attributed to the fact that the interest is paid without deduction of income tax. Estimates of the foreign holdings have varied between £100.000.000 and £500,000,000. and while it has been held that the British Government will never again issue a loan where tax is not deducted at the source, it, has previously been suggested that conversion may bo impracticable unless the foreign holder is offered stock in exchange on which interest will be paid without deduction to residents abroad. The possibility of this concession being necessary has now been officially acknowledged. British credit, judged by the market value of the long-term gilt-edged securities, is still substantially below the 4 per cent, level at which ihe conversion scheme would be practicable; lower, in fact, than it was last Octoher when Mr. Snowden promised a big conversion operation when conditions were favourable. The latest quotation for 2£ per cent, consols is 57J, (equivalent to about £4 7s per cent.), whereas the price on a 4 per cent, basis would be Other stocks are relatively lower, 3jj per centconversion loan being quoted at 78 1-8 (as against 87£ for 4 per cent, return) and 4 per cent, funding loan at. 91|j (as against 100).