BRITAIN’S FINANCES

Otago Daily Times, Issue 21829, 16 December 1932, Page 13

BRITAIN’S FINANCES

• ft*” 11 - ! CONVERSION ACHIEVEMENT ! CAPITAL EMBARGO LIFTED STEADY AND SOLVENT COUNTRY. (From Odb Own Correspondent.) LONDON, October 7, The results of the 5 per cent, war loan conversion and the decision of the Chancellor of the Exchequer to remove the ban on new issues were announced at the same time. The Treasury issued the following statement: — The 5 per cent, loan conversion offer having boon closed at the end of business to-day (September 30), the Chancellor of the Exchequer announces that out of the total amount of the loan outstanding on June 30 last—nearly £2,085,000,000 approximately | £1,920,000,000 has been converted, | leaving only £165,000,000, or 8 per \ cent, to be redeemed in cash on Dec- , ember 1 next. I The conversion operation having now | been completed, the Chancellor feels j that no further restrictions in the way of new issues are required with the exception, until further notice, of: 1. Foreign issues, i.e., issues on behalf of borrowers domiciled outside the Empire, or issues the proceeds of which would be remitted abroad. 2. The optional replacement of existing issues by new issues, involving either underwriting or an invitation to the public to subscribe new cash. The Chancellor would ask, however, that with a view to co-ordinating the requirements of intending borrowers, and so preventing possible congestion of the market, no issue ranking as a trustee security may be made without prior agreement with the Bank of England regarding the amount and date of issue.

The ban on new capital issues came into effect upon the announcement on June 30 of the War loan conversion plan. It has had no legal authority, but has been made operative by the close cooperation of the banks with the Treasury which, had an issue been attempted, would have doomed it to immediate failure.

It was based on the request made in the House of Commons at the end of June by Mr Chamberlain. He said: *'l am sure that anyone who may be contemplating the issue of new capital in the market in the early future will forbear from coming forward for a few weeks while this great operation is proceeding, and that the authorities in the City of London will co-operate in this necessary object.” Provision for the comparatively small amount of £165,000,000 of the War Loan Stock, which will now have to be paid off on December 1, will provide no difficulty for the Treasury. GOVERNMENT’S CONFIDENCE.

“ The likelihood of keen competition with such issues as the Three and a-Half per Cent. War Loan/’ comments the Financial Times, “is slender. That may be said without denying the possibility that, now that there will be other things to go for, there may be selling and a little dullness over the next few days. Above all, it seems worth remembering, in connection with the removal of the embargo on capital issues, that the Government would not have gone so far had it not been supremely confident in the position and future of gilt-edged. Large sums await investment outside that list, and they will be free to minister to economic revival. But, clearly, there can have been no departure from the view that interest rates will continue to fall and that long-dated gilt-edged prices will rise. Holders of the Five Per Cent. War Loan have brightened that prospect by accepting 3} per cent, in exchange to so magnificent an extent and thus removing the one obstacle to a natural movement. The provisional final figures disclosed last night reveal that only £105,000,000, or 8 per cent., is left unconverted. This response overtops the most sanguine expectations, completely confounds the pessimists, and imparts an added impetus to the downward trend of interest rates from which the whole nation will gain.” SAVINGS CERTIFICATES.

Sir Robert Kindersley, a director of the Bank of England, addressing the Southern Regional Conference of the National Savings Association at Oxford, suggested “to those who are in the habit of abusing the banking institutions of this country and of aiming at their discomfiture and disruption, to pause a while and carefully study the world crisis of the past 12 months in relation to the banking situation of the various countries.

“ I say, without fear of contradiction,” he went on, “that the attitude of the holders of savings certificates during the crisis is something for all of us to be proud of. “We have been through the fire and stood the test. There again, as you know, it was only necessary to have the very mildest forms of restriction so far as exported capital from this country was concerned, because those in authority knew that so far ns the great mass of people was concerned they could rely on their patriotism and their comm m sense. It is this policy of trusting the people to do what is right which breeds patriotism and dismays those who try to fish in troubled waters.” It was revealed that the cash value of certificates issued represented £872,000,000, and that the small savings of Great Britain totalled £2,250,000,000, or £SO per head of the total population. SOLVENT, STEADY COUNTRY.

* Major-general J. E. B. Seely, chairman of the National Savings Committee, at the North-Eastern Regional Conference of the National Savings Movement at likeley, stated: “ The conversion has been a great success. The confidence in Britain felt by countries abroad now stands higher than at any time since the war. In this successful conversion our country shows herself able to stand four-square to all the winds that blow, as a solvent, steady, patriotic country.” On the previous day, General Seely proceeded, lie had been telling the Governor of the Bank of England and the permanent head of the Treasury some of the tilings he had proposed to say that day. They said: “Yes, all of that is true, but it would not do for you as a public man to give the idea that the Ship of State, having weathered the headland, is now safe in the open sea.

“I feel hound to add this word of warning,” General Seely concluded. “ The ship is not yet clear. Wo have weathered a dangerous headland which might have destroyed the vessel. But there are rocks ahead demanding the most skilful navigation and the complete loyalty of the crew if they in their turn are to he weathered so that our ship may sail into safe waters. Lot all members of all parties combine to say: ‘Wo will save the Ship of State.’ ”