INSCRIBED STOCK

Southland Times, Issue 20976, 8 January 1930, Page 8

INSCRIBED STOCK

A SUBSTITUTION ——, . • WITHDRAWAL OF PRESENT DEBENTURES. NEW ISSUE AT 5J PER CENT. (Per United Press Association.) Wellington, January 7. The Minister of Finance (the Right Hon. Sir Joseph Ward), announced to-day that as from to-morrow, the 9th instant, the present issue of 51 per cent, debentures and inscribed stock is being withdrawn, and an issue bearing interest at 54 per cent, with . currency to February 15, 1937, is to be substituted therefor. In making this announcement, the Minister said the issue would be used for State Advances, land for settlements and funding other accounts that are providing for developmental works. Local ‘‘over the counter” sales at 5 j per cent, have been on issue since February last and for some time ample funds were received from investors at this rate to meet requirements, especially for State Advances purposes, whereby arrears of new loans were overcome. The diverting of our local issues to the redemption of the 1929 consolidated stock that matured in London on November 1, together with the necessity for utilizing the resources of the treasury accounts for the same purpose, temporarily used up the cash that would otherwise have been available for capital expenditure in the Dominion. As stated above, earlier in the year it was possible to borrow locally at lower rates than abroad, but factors that have been operating outside the Dominion have had the effect of hardening the rates with the result that sales at 5J per cent have fallen off considerably. The -high rates offered for money in America prior to the financial crisis there attracted capital to that country; causing the Bank of England rate to be raised to preserve the gold standard and regulate the exchanges. This, with other disturbing factors, affected the money market in London so that the final conversion of the New Zealand consolidated stock maturing on November 1 last could only be offered to holders at a higher rate than obtained in the earlier conversions. The market in London was practically closed for new money. At the remunerative rates in Australia, the Commonwealth Government issued its last local 51 per cent, loan at 98 with currency for five years, yielding a return to the investor (including redemption) of £5 14/4 per cent, per annum. Sir Joseph consequently considers it desirable that money still required to complete the programme for the year should be obtained in the Dominion and -he confidently invites all New Zealanders who are able to subscribe to the present issue. In this connection it may be stated that income tax on interest on moneys invested is not deducted from the half-yearly interest payments, but is only payable by investors whose incomes are assessable for such tax. Statement Denied. A denial was made to-day by the Prime Minister of the published statement that “New Zealand is preparing to invest another £15,000,000 in new railways.” “This assertion,” said Sir Joseph, “is misleading, and is not correct. The Government is not embarking on the construction of any new lines, but is merely hastening the completion of the existing trunk lines which are essential in the interests of the Dominion as a whole. The Government’s policy in respect to transport has already been laid down by me on various occasions, and may be briefly reiterated here as follows. To complete the trunk lines as the foundation of a system not to construct any more short branch lines where transport needs can be adequately and more economically catered for by other means of transport, to investigate the position of the present branch lines with a view to deciding as to their future working; to write down railway capital by the amount contributed thereto from the revenue, and cancel the present subsidy from the Consolidated Fund; to co-ordinate the railway and motor road construction policies; to take steps to bring about co-ordination between the road and rail transport services.”

In conclusion, Sir Joseph adds that it cannot be gainsaid that the railways must be the backbone of the Dominion’s transport system, and that the policy announced above, which the Government is pursuing, will eventually obtain a complete system of unified transport based on the correct degree of co-ordination between road and railway.