CREDIT IN LONDON

New Zealand Herald, Volume LXXIII, Issue 22461, 3 July 1936, Page 10

CREDIT IN LONDON

The Prime Minister's statement about New Zealand's overseas interest bill, and the Government's intention to try, through the Minister of Finance, to have it reduced, has had a marked effect in London ; not on opinion alone, but on the actual prices of' stocks. Mr. Savage's words may not have been the most judicious possible, all things considered, but London seems to have taken them much more seriously than was really justified. To read into them a suggestion of possible default if no arrangement can be reached with bondholders is going further than the text of what was said warrants. At the same time, it needs to be realised that the country's credit is a plant of delicate growth, more easily injured than restored again. New Zealand bond's and stocks are not concentrated in a few hands. As trustee securities and as investments of high repute, they have been widely distributed among many investors. It is natural that these •should include people easily disturbed. Signs of uneasiness in only a few of them can soon influence the tone of the market, and the tendency, once created, is exceedingly likely to grow by its own momentum. Thus the very popularity which New Zealand securities have long enjoyed can help now to make them the more susceptible. Their reputation is high, and they are expected to live up to it. It •should be remembered also that suggestions of coming to an arrange inent with bondholders are not convincing to those who know that the bondholders are many, and are farscattered, that means of mobilising them to make a bargain simply do not exist. These are some of the reasons why statements, made with the best of intentions and accepted equably here, may produce very different reactions abroad.