LOANS CONVERSION.

Wairarapa Age, 16 March 1933, Page 5

LOANS CONVERSION.

HALT-WAY mark reached LAST NIGHT. APPLICATIONS FROM PUBLIC OVER £34,000,000. ACTION BY STATE DEPARTMENTS IN FEW DAYS. WELLINGTON, March 15. By to-night the half-way mark of conversion had been reached, for the Minister of Finance (the Rt. Hon. J. G. Coates) was able to announce that applications and promises to convert now covered £34,642,672 of the total debt of £69,514,000 that is in the hands of the public. It is anticipated that the conversion of the portion of the debt that is held by State Departments, another £45,800,000, will be announced within the next few days. When the Minister of Finance, the Rt. Hon. J. G. Coates, introduced the Government’s conversion proposals into the House of Representatives, he made it plain that although an annual saving of £570,000 would be of considerable assistance to the State, the first and primary object bf the scheme was not so much to relieve the Budget as to secure a reduction in the general level of interest rates and thus to ease one of the prinicpal burdens under which the industries of the Dominion have been languishing. Although the scheme is still uncompleted, there are already signs on the stock market that the Government’s interest reduction, accompanied by the reduction in short term rates that is to be made by the banks, will before long have a markedly beneficial effect by initiating a new era of cheap money and so lessening working costs, which are embarrassing ajmost all forms of business to-day The rate payable on gilt-edged Government securities has always been the standard rate of interest in New Zealand and in the opinion of the Government, when these gilt-edged securities are reduced to a four per eent. basis money that is at present lying idle will be forced out into higher-yielding industrial stocks. When the conversion scheme is out of the way, it should thus be possible to float debenture issues on a lower basis than many firms wV/ ‘2 V* 7 at aay time 3 “ ce the war. The Government contends, therefore, that the fixation of a standard of four per cent, interest will not onlv ease the load that has been piled on to “, l y , fi ,™ s and undertakings faced raVes f ? n ‘ n ®. P rofits and feed interest tl<le of b the W 6 1 CnSUre that Whe " th<? tide of the depression turns and recovery fully begins industry will not be hampered by a reluctant 7 investing Tn the “v an artlde ,vhich appeared the ?ntrna EC ? 02DIC ? Oumal > ’ ’ following the introduction of the British eonver irt" R ri, e “ e \ t r h ° disti “g“mbed economth»t a i * aynard Keynes, declared that a reduction of the long term rate • of interest to a low level is probably the most necessary of ill measures if ZZure^d^-” 11 ’ 6 the ‘ slum P and secure a lasting -revival of enterprise.” This is precisely the measure which the and R T? h^ t : k<?n in Nesr Zealand and it is expected to bring about the aame valuable results, though naturally