ETHICS OF LOAN CONVERSION.

Otago Daily Times, Issue 21688, 5 July 1932, Page 6

ETHICS OF LOAN CONVERSION.

In a letter which we publish this morning a writer who signs himself “ Social Credit ” betrays considerable chagrin at the idea that the British Government’s war loan conversion scheme should be regarded with satisfaction as a measure fraught with prospects for the national benefit. He asks contemptuously what difference there is, other than in degree, between this plan of loan conversion and repudiation. He complains that the action of the Lang Government in refusing to pay any of the interest due to bondholders was called repudiation, yet when the British Government decides on “ a wangle ” which is to result in paying less interest than heretofore to its bondholders “it is a tremendous evidence of fiscal and social strength and a triumph of statesmanship.” We can imagine the simple British bond-holder perusing our correspondent’s letter in mingled surprise and amusement. If “ Social Credit ” does not make a mere affectation of obtuseness, and does not really appreciate the difference between this loan conversion and an act of repudiation, he is to be commiserated. People whose outlook is less embittered by visions of dark financial manipulations will readily understand that what widely differentiates the British loan conversion proposal from repudiation is that it involves a voluntary arrangement in respect of which the bond-holders arc consulted. It is for a voluntary agreement on their part to accept a lower rate of interest than they have been receiving that the Government has appealed. Their anticipated response in the same spirit of goodwill and patriotism which, as Mr Baldwin has observed, the British people have always shown when a great national

effort has been required, may reveal a lack of his own superior perspicuity for which “ Social Credit ” may pity them, but it is expected to have the effect of bringing about an annual saving of the not altogether insignificant sum of £23,000,000. If the British bond-holder does consider such a result well worth attaining at a little sacrifice to himself, and does not choose to steep his soul in gall and wormwood and to think in terms of “ wangling ” and “ repudiation ” there should be no occasion for our correspondent to worry or to groan over the blindness of the victims and the awakening that is to. follow. One thing, he declares, is certain —“ no solution will have been found for the problem, so-called, of unemployment.” The fact remains that if the loan conversion is going to reduce the public expenditure by so many millions and to enable taxation to be reduced the effect will lie that some millions will be set free for circulation in the ordinary channels, and from the stimulus to industry thus afforded an increase of employment should follow.