The Timaru Herald. TUESDAY, MAY 12, 1925. THE HEW ZEALAND LOAN.

Timaru Herald, Volume XCVIII, 12 May 1925, Page 8

The Timaru Herald. TUESDAY, MAY 12, 1925. THE HEW ZEALAND LOAN.

Unusual interest is certain lo be evinced, m London m connection witli the issue of til© IN e\v Zealand j loan prospectus, particularly m view of me restoration or tbo j g-old standardand tlio Dominion's excellent credit, it is proposed to nuse a Loan of seven millions at j U4£ at 4 1 per cent. The terms j are a trine less favourable to tlio boiTotver than last year’a loan, but no one can say that New Zealand is now offering- specially inviting- terms. Last year s loan was issued at 95 with the sarno rate of interest. The loan was very largely oversubscribed, notwithstanding- the fact that the terms weie more favourable to the borrower than was the case With all other colonial loan issues. The late Prime Minister pointed Avith pride to last year's loan, and was able to show that New Zealand actually held pride of -place ill British financial circles, it is worthy of note, in this connection, that colonial loans last, year, when New Zealand placed an issue on the London money market, had all been floated at. a higher i*ate than o per cent. Southern iihodesia, vY ostein Australia and South Australia paid a hat rata of To i!s per cent, (live per cents issued at yd); South Africa paid £5 Is (five per cents., issued at 97£), and Queensland £5 10s tid (5£ per cents, issued at Dili) The hat. rate for the New Zealand loan issued about the same time, ami very largely over-subscribed, was £4 14s od—a successful loan dotation giving* practical expression to the unbounded confidence the British investor has in the financial stability of this richly favoured Dominion. Dining- the three-year period, 1921-1924, ending- last J uue —the most difficult post-war period—New Zealand raised close on twenty bullions in London, the average fiat rate of interest, disregarding redemption value, being £5 7 s B*}d. The Dominion raised £5, 38b,000 in June, 1921, at 6 per cent, issued at 9(1, giving a flat rate of 6£ per cent. Nme months later, the late Mr Massey “went on” the London market and raised £5,000,090 . at 5 per cent, issued at par, the loan eliciting a two-fold subscription. Tor a while this stock : commanded a better price on the London Exchange than 5 per cent. British war loan. In tho following May £4,000,000 was borrowed at 4 per cent., the issue price being 92, giving a flat rate return of £4 7s pea- cent. At tho same time, Victoria borrowed, at an effective rate of £5 Is 6d, and New. South Wales at £5 4s 9d. Did not these figures and the eulogy of “The Times,” and tilt great financial journals at Home, rally justify the late Finance Minister 1 s reiterated claim that the result of New Zealand’s loan opera tions demonstrated that “the Dominion holds supremacy in British financial circles ?” it is interesting- to note, however, the attitude of some of the Opposition journals since another loan was proposed. Doubtless the districts in which certain carping lnberai journals circulate, are not prepared to champion an economy campaign as far as public works and railway improvements are concerned. On the contrary, it has become the practice to recommend economy lor the other fellow. There are, of course, heavy financial obligations entailed in the Government’s hydro-electrical policy, while tlio -Railway improvement programme can hardly be undertaken without borrowing. Moraover, the Dominion has very heavy obligations to meet in I connection with loans maturing j!almost at once:

Year. £ 1925 ... ... ... 11,891,507

1920 ... 14,243,290 1927 4,017,480 _l' lum tlio above it will be seen taut some ox me, war loan, bonds arc laiimg' due, and the AotxiigxYiiuiscer ox xinaneo must navu xunds available xo repay lenders wno do not consent to renew tlxear bonds. 'i'JUo Government also requires funds to maintain me butte Advances Department, otherwise, Hie critics can bo ejected, to denounce tfie Minister lor -ins failure to honour the Lrovernmcnlvs promises. Ihiiing the last few years the operations of the State Advances Department have grown considerably, as the following records show: Total Advances. Year. £ , 1922 1,921,965 1923 2,382.105 i 1924 ... U,2U5,656 ] During- the first three months of I llie last financial year, namely I the quarter ended bUtn June, ’ illAl, the following advances were made: £ Settlers 561,350 Workers 475,360 Local authorities 69,925 Total (3 months) ... £1,100,635 Undoubtedly it is not difficult to' preach a. non-borrowing policy, but in view of the rapid development taking place in all parts ol . the Dominion, and the pi ogres- j .-jive programme ol railway improvement and a comprehensive! public works policy, which; ensure, of course, the creation of valuable assets, it is difficult to see how fairly heavy borrowing can be avoided during the next lew years.