WHAT DOES CONVERSION MEAN?

Otago Daily Times, Issue 21688, 5 July 1932, Page 9

WHAT DOES CONVERSION MEAN?

TO THE EDITOR.

Sir, —A financial sensation is being made out of the British war loan conversion scheme. It is hailed as probably thefficginning of a great trade revival. The Stock Exchange starts into new life and activity on its appearance. The newspapers hail it as a tremendous evidence of “ fiscal and social strength.” Optimism prevails everywhere (or one would think so), but one would like to know why? What is the difference, except in degree, between this and what is termed repudiation, at the mere mention of which newspapers and politicians alike hold up hands of horror and the Stock Exchange quivers with an ague of apprehension? When the Lang Government refuses to pay any of the interest due to bondholders, or when the Irish Free State Government does the same, it is repudiation. When the British Coalition decides on a wangle that is to result in paying less interest than heretofore to the bondholders it is a tremendous evidence of fiscal and social strength, and a triumph of statesmanship. This all savours a good deal of the “ abracadabra, that word of fear and the other two words that he never could hear ” —because possibly they are whispered in that holy of holies, the bank board room. , ~ , ... The money doctors have decided tnat something must be done or the cult will come to an unhallowed end. Signs in the direction of inflation—we beg their pardon, reflation —have not been wanting. The way and the public mind haying been prepared, now the effort is launched. The bank rate ia lower than for decades, war loan is being converted, industry w to get cheap money —and what then, ay and by—and at no very distant interval—boom will again be followed by slump more disastrous than ever, with its train of bankruptcies, suicides, and misery. Business will be carried ahead on bankcreated money, for which .it will, be further in debt to the financial institutions, and while this money is in their hands people will be able to buy a somewhat larger proportion of the goods already in existence, but how are those being created to be bought later on? . Confidence will again do the disappearing trick, credit will be curtailed again, and with what results? During the last decade, it is freely said, about. 90 per cent, of British industry passed' into the ownership o control of the banks. When the smoke clears away after the next cycle, will the remaining 10 per cent, have gone the same road? “ Fear the Greeks when they bring gifts.” One thing we can be certain ot, no solution will have been found for the problem, so-called,, of unemployment. Men and women will still be superfluous in the financier’s scheme of thing*-! am. rtc, Dunedin, July 2.