BRITISH LOAN CONVERSION

New Zealand Herald, Volume LXIX, Issue 21263, 17 August 1932, Page 8

BRITISH LOAN CONVERSION

For the first time since the greatBritish war loan conversion scheme was launched, figures are given showing what proportion the amount to be converted bears to that for which the holders have elected to receive cash on December 1. It is only a progress report, since the optical to have bonds redeemed in cash may be exercised until September 30. Still, the great rush of applications for new stock can now be regarded as finished, since July 31 was the last date on which conversion applications qualified holders to receive the 1 per cent cash bonus the Government will pay those making such an election. The results shown in a cable message are those for July, since the conversions are with benefit of the cash bonus. Only round figures are given, but they are deeply impressive. The conversion applications aggregate £1,850,000,000 in value; the demands for cash redemption are in respect of £48,000,000 worth of stock. This means that of the £2,084,994,000 of stock £180,994,000 remains without notification one way or the other. If the holders continue passive until September 30, their silence will be taken to mean consent to conversion and the Treasury is legally empowered to proceed on that assumption. As the position stood at July 31 the demands for cash redemption were for a fraction more than 2l per cent of the total sum concerning which notifications had been received. In the Goschcn conversion scheme of 1888 holders of £19,000,000, or 3.35 per cent of Ihe total of £557,993,000 in consols elected to take cash. So far therefore the ratio of conversion is higher for the present loan ; but

it is not safe to assume the proportion will be preserved, for, apart from overseas holders whose communications have yet to be received, the greater number of those who propose to notify intention to convert will have done so and qualified for the bonus. Even if there were no prospect except demands for redemption for the remainder of the loan, it would mean that all save 11.27 per cent of the total would be converted. Thus success is assured, and the only possible change in the position will make it greater. The Treasury must find £18,500,000 to pay the cash bonus, and so far as is known at present, £48,000,000 for redemption. All this money, and enough to cover the £186,994,000 concerning which no notification has been received, can be raised cheaply enough to make the relief to the Budget, when it accrues next year, of high practical value.