MONEY FOR NOTHING

Sun (Auckland), Volume 1, Issue 84, 30 June 1927, Page 1

MONEY FOR NOTHING

PREMIUM BONDS A NO-LOSS GAMBLE SYSTEM EXPLAINED MOST people in Auckland have but a hazy idea as to what are premium bonds, though there is one member of the community, one time resident in Te Puke, who is probably quite enthusiastic about them. On a £lO Panama Canal bond he drew £16,345. It is on this system of premium bonds that it is hoped to finance the canal schemes which have as their object the linking-up of the Waitemata and Manukau Harbours, and the Waikato River. Premium bonds were explained to an interested gathering of local body representatives at Avondale last evening by Mr. W. Noton. Just at present they are illegal in New Zealand, but it is hoped that legislative authority will be given to allow of an issue. There are several schemes of issuing them. In most cases the applicant takes up a bond of, say, £lO, on a loan maturing in a certain number of years. No interest is payable, the interest being pooled, divided into prizes, of from, say, £IO,OOO downwards, and these are ballotted for. A winner loses further interest, as his bond is redeemed as portion of the prize. However, none of the prizes are of a less value than the bond. The main point is that the speculator cannot lose his money, and as the years roll by, if he is still left in, his bond increases in value, the prize-win-ners being leaving a smaller number in the ballot with the same number of prizes, so that the chances of drawing a prize are better. Many of the bonds never draw a prize, and are redeemed at par. In the last stages of the loan the investor, who has bought on the Stock Exchange, and paid perhaps double the amount of the bond < n the chance of drawing a prize, finds that the loan is being paid up at par, and that there are no more prizes, in which event he naturally shows a loss. In some bond issues 2J per cent, interest is guaranteed, and the balance of the interest allotted each year is ballotted for. The Congo bonds, with Belgium security, issued their bonds in 1888 at par value of 100 francs, and each year those who are left in have five francs added to their par value, so that the holders, if they never draw a prize, get their money back and a bit more —quite a bit when redemption takes place. PAST LOCAL INVESTMENTS Mr. Noton stated that when premium bonds were being issued in Auckland, before the matter of their legality was taken to court and his firm was fined £SO for issuing them —issuing City of Paris Bonds—his firm was receiving application valued at £2,000 a week for six months. There was not a man or woman in this country who would not invest in them. u They would find that, if there was an issue in New Zealand, it would do a tremendous amount to combat the present gaming evil, which was costing New Zealand a huge amount each year. “It has been estimated that over £2,000,000 goes out of this country every year to Australia and Tasmania on pure gambling, and this is the estimate of a public official in Wellington,” stated Mr. Noton. “And I am not surprised at these figures when you look at what we were doing with premium bonds.”

He was of opinion that any issue in New Zealand would have to provide for big prizes, say, a first prize of £IO,OOO, to compete with Tasmania. Once a bond was bought the investor had an interest in the prizes until either he drew a prize, or the bond was redeemed.