BRITISH LOAN

Waikato Times, Volume 126, Issue 21056, 7 March 1940, Page 7

BRITISH LOAN

ISSUE OF £300,000,000 STABILISING INFLUENCE LONDON PRESS COMMENT (Official Wireless) (Received March 7, 11.0 a.m.) RUGBY. March 6 The prospectus is published of the Government’s new £300,000,000 three per cent loan, to be issued next week at par, with a currency of between 15 and 19 years. The announcement of this, the first long-term loan to be issued during the war, is well received. The city’s comment on the terms of the new loan yesterday was a rise to par of the 3£ per cent war loan for the first time since 1938. It opened this morning at £IOO but later reacted to £99 17s 6d. The Times says that there is no doubt that in view of its modest amount and the prevalence of some expectation that the terms would not be quite so favourable the loan will be fully subscribed. It emphasises, however, that this cannot be the last of such loans and that no subsequent loan can be on more favourable terms. “We must,” it says, “have no repetition of the finance of the last war, which began by offering the investor rather over 3*. per cent and ended by giving him up to six per cent on Exchequer bonds, though the bulk of the war borrowing was done at just over five per cent. This cannot be avoided merely by offering less. The conditions in which less will be accepted must be preserved by avoiding inflation. It is, therefore, true to say that the success of cheap borrowing now is essential, in order to prevent expensive borrowing in the future and that the new loan should exercise a powerful stabilising influence both in the financial and economic sense.” Avoidance of Inflation The Financial News also notes that the real importance of this operation is that its success will materially help to^ reduce the danger of inflation. “Those who subscribe to the utmost to this first major issue,” it says, will have the added satisfaction of knowing not merely that they are helping to pay for the war but that they are protecting the real purchasing power of their remaining income.” Daily Mail’s comment concludes: “Our financial position is sounci.