THE OTAGO DAILY TIMES MONDAY, MAY 31, 1926. THE NEW ZEALAND LOAN.

Otago Daily Times, Issue 19803, 31 May 1926, Page 6

THE OTAGO DAILY TIMES MONDAY, MAY 31, 1926. THE NEW ZEALAND LOAN.

It might have been supposed that the six-million loan, for which the Government is approaching the London market, was not very advantageously timed, since the deadlock over the conditions in the coalmining industry is likely to have created a feeling of uncertainty and apprehension in the minds of investors, On the other hand, the Home market seems to be unusually bare at the present time of issues that constitute trustee securities. Moreover, the issue of the New Zealand loan coincides with the announcement of the results of the past year’s finance in the Dominion, showing—though the increasingly complicated form in which the public accounts are presented makes it impossible to ascertain the results without a good deal of trouble —that there was a substantial balance of income over' expenditure. These are two factors that will have operated to secure a favourable reception for the loan. But, over and above them, there is the circumstance that, as one of the financial news, papers in London observes respecting the issue, the terms are decidedly attractive. A loan by a Dominion with a good reputation at Home, which offers a return of £5 2s 6d per cent, to the investor, is one that may certainly be expected to make a strong appeal to those who have the ■ control of large funds. It is unfortunate that the Government should have to pay such a high rate for the money it is borrowing. It may be assumed, however, that it acted on the best advice procurable before the terms of the issue of the loan were settled by it. It is to be remembered, also, ihat the return upon investments in the locus of each of three Australian States which have been placed on the London market this year is within a penny or two of that provided by the terms of the present loan. The fact that the country is paying dearly for its money will not be without its benefit if it impresses the Government of New Zealand with a sense of a need for practising more of the self-reliance which is freely preached by it. It is probable enough that, in existing circumstances, the domestic market would have experienced some difficulty in absorbing a loan cf six millions, and it is more than probable that, if the loan had been offered for subscription within the Dominion, the withdrawal of so much money from industrial and other objects might have been better employed if retained in its original channels. But an effort may at least be made to curtail the programme of public works construction while it costs so much to secure the money that is required as the present loan is costing. One-half of the total amount of the loan is ear-marked for expenditure on railway construction, additions, and improvements. We regret that we cannot think of any railway construction, additions, and improvements in the Dominion that will earn sufficient to meet the interest on the money that is being raised to pay for them.