AUSTRALIA’S BIG LOAN

Otago Daily Times, Issue 21386, 14 July 1931, Page 8

AUSTRALIA’S BIG LOAN

TOTAL OF £360,000,000.

(From Our Own Correspondent.) SYDNEY, July 2,

When the broadcast appeals throughout Australia this week by the Prime Minister (Mr Scullin), the Federal Treasurer (Mr Theodore), and the Leader of the United Australian Party (Mr Lyons), it may be said that the campaign for the great conversion loan has been opened. The conversion of all interior loans with the object of reducing interest all round to 4 per cent, is the most important part of the plan adopted by the Premiers Conference in Melbourne last month with the object of rehabilitating Australian finances. All the Governments realise the big task that is ahead of them, and that publicity will pay a vital part in securing that co-operation that will be essential to success.

The total of Government debts (Commonwealth and States) domiciled in Australia is £556,000,000, but the approximate amount for conversion into consolidated securities of the conversion loan is £196,000,000 less than that. Here are particulars of the amounts that must be deducted:—

Holdings of Commonwealth and State Savings Banks, maturity dates of which are subject to arrangement —£117,000,000. Tax free securities held by public and governmental authorities other than sar ings banks, maturities of which will remain as at present—say, £50,000.000.“ Treasury bills held by banks which will not be converted into long-term securities—£22,ooo,ooo. Securities representing investments of overseas trade, money, for which shortdated securities may be issued —say. £7,000,000. Under the Act 10 maturing dates have been provided, and the amount maturing at each fixed date will be £36,000,000. It is pointed out by Mr -Theodore that the manner in which the new maturity dates have been fixed will enable a better spread of interest payments over the various months of each year. The necessity will be avoided of storing up money for the payments of large sums at inconvenient periods. The Treasurer considers that it should be possible to increase the maturities of 1938, 1941, and 1944 by, say, £20,000,000, in each case, making the total redeemable in each of these years £56,000,000. Interesting British parallels for the debt conversion that Australia is about to attempt have been found by Mr Theodore. In 1832 the British Chancellor converted navy and other 5 per cent, stocks amounting to £152,000,000. The holders wore not asked to assent. The Act provided that those who did not dissent should be assumed to have assented to the terms proposed. In 1824 the British Government dealt, with £75,000,000. The object then was to reduce the interest from 4 per cent, to 3$ per cent. In 1830 £154,000,000 was converted from 4 per cent, to 3J per cent. A total of £558,000,000 was dealt with in like manner in 1888.