NEARING THE END

Waipa Post, Volume 46, Issue 3305, 21 March 1933, Page 4

NEARING THE END

THE CONVERSION SCHEME.

FINANCE MINISTER'S COMMENTS.

WELLINGTON, Monday.

The latest return from the treasury issued this morning shows that applications and promises to convert now total £88,250,000, or almost 77 per cent of the Government's whole internal debt. Applications received on Saturday covered £2,250,000 worth of stockj, but this amount should be materially exceeded to-day, since there is now a two days' mail waiting to be checked by treasury officials. Although the scheme closes on Friday, all applications will be accepted which bear Friday's post mark from any part of New Zealand, or which are lodged with any branch of any bank on that day. Since this means that at least part of the mail will hot be received until the following Monday, the final result of the conversion will not be known until early next week.

The Minister of Finance, Hon. J. G. Coates, discussed to-day the charge that has been made in some quarters that it is misleading to represent conversion as voluntary when a penaltyis provided for those holders who fail to convert. "I think my attitude on this point has already been made amply clear," said Mr Coates. "It is true that under the terms of the Finance Act passed by Parliament, stamp duty on interest amounting to 33 1-3 per cent will be imposed on those bondholders who have not converted their securities by next Friday night. But I must emphasise again that the penalty is not to be regarded as a threat to bond holders in general. It is, on the contrary, merely an assurance to the vast majority of holders who do not convert that they will not be placed at a disadvantage by their rivals or competitors failing to convert.

"I might quote as an instance the position of mutual insurance companies or trustees," he continued. "Supposing a majority of them accept voluntary conversion in good faith, but one of the companies and three or four trustees will not accept it and refuse to convert. A most unfair situation is at once created. A company would hold itself up as a hero and proclaim that what it had done was done solely in the interests of itaat policy holders. Similarly a trustee who took up such an attitude would have a marked advantage over those trustees who converted. The majority of bond holders, (I am convinced, realise the necessity for conversion, and are ready and willing to convert; but one or two, if they were allowed to stand out, might be responsible for no end of heartburnings and create a position that would be impossible. "It is perfectly true that no such penalty as we contemplate was enforced in Britain's war loan conversion last year. But there circumstances were entirely different. The loan had matured and those who dissented were paid off. Our own debt is not immediately maturing, and there is no other way of ensuring full justice to all than by the provision of this penalty. I would submit that, considering the widely different circumstances, the penalty we have provided for non-conversion is almost exactly on a par with the bonus which the British Government offered for conversion. If the penalty is an inducement to convert, then the bonus was just as much an inducement. Yet no one would say that conversion of the British war loan was riot voluntary."