OVERSEAS LOANS

New Zealand Herald, Volume LXXI, Issue 21807, 23 May 1934, Page 15

OVERSEAS LOANS

Sir, —Your leading article of Saturday last invites some comment. I submit that when Mr. Neville Chamberlain said it was neither practicable nor desirable to consult the Dominions with a view to floating an Empire loan to convert the Dominions' heavy commitments to a lower rate of interest, he most probably intended to mean that Britain will not "consult the Dominions," as in the present relationship of Britain and the Dominions it is not the policy nor the business of Britain to "consult the Dominions" on tho subject of their loans. You refer to the impossibility of isolating and identifying the investors, but to-day most of the loans are issued by organisations. The operations of Investment Trust of London, the personnel of which is to some extent that of the bank directorates, are well known. Bank money is available through that organisation for investment. The Association of Foreign. Bondholders is again a powerful organisation, the personnel of which also is to some extent similar to that of the banking directorate. The purpose of the Association of Foreign }3ondholders was stated by a London financial paper to be to secure payment of interest during a depression by an appeal to "national honour," followed by insisting upon the enforcement of rigid economy in the debtor country. The demands made upon our Government have not been published, but a New Zealand Cabinet Minister stated in tho House that the money-lender has the right to say what our standard of living should be. One part of yot;r article will be appreciated where you say "The debts the Dominions owo are in no way the business of the British Government," the funded war debts of Australia aud New Zealand excepted. We often hear them referred to as debts to Britain, whereas they are debts to profit-making organisations, who aro trading with money, the owners of which may, or may not, be receiving any of the gain. There may bo more justification for converting overseas loans than for reducing tho rate of interest by legislation in New Zealand. It was the organisation of bondholders in Britain which, when Germany declared itself unable to pay, agreed to forgo the interest on the Gorman debt (other than tho war debt) until Germany sufficiently recovered to make the payment possible. It is refreshing to read in your article tho demonstrated truth that "British opinion through crisis and depression has been overwhelmingly against any interference with monetary contracts." This calls attention to how far our Government has departed from British opinion and practice in its local policy of reduction of interest on our national and local body indebtedness, as well as in repudiating contracts made under the law in the payment of miners' pensions. Our Government is directly in touch with the bondholders' organisation of London. Tho term of Parliament has been extended bore to allow another payment for another year at a rate far above what would be accepted after negotiation, and when tho Government convoys the public desire for decrease _ in interest, relief will be offered, which will probably bo during the coining election year. W. J. Jordan, M.P.