GOVERNMENT BONDS.

New Zealand Herald, Volume LXIX, Issue 21132, 15 March 1932, Page 11

GOVERNMENT BONDS.

CONVERSION CONDEMNED. " WILL REFLECT ON CREDIT." STAMP DUTY PREFERABLE. "It is a most regret table situation when a Government finds it necessary to give serious contemplation to compulsory changes during the currency of its bonds, and such action will reflect on the credit of (lie country," said a leading business man yesterday, when discussing the interim report of the National Expenditure Commission.

" If, however, it is absolutely essential fo the well-being of the people of the Dominion as a whole, then, in my opinion, there should be a temporary reduction in the rate of interest until such time as tho financial state of the country permits of a reversion to the original terms of the contracts.

" To cancel all bonds, whether longdated or short-dated, and issue conversion loans, would be going to an unnecessary length and expense; and would be unduly inequitable. We all must feel that the present world-wide deflation is a passing phase, and, this being so, the Government should ask for breathing space only. To effect a forcible reduction for a long-spread-out period, such as was done in Australia, amounts to a political hold-up. " I therefore am strongly of opinion that the measure proposed by the commission, whereby revenue stamps are affixed to interest coupons, is tho only satisfactory method of dealing with the matter, and would have the added virtue of being capable of review each year."