War Borrowing.

Press, Volume LIV, Issue 16161, 15 March 1918, Page 6

War Borrowing.

Although it is, of course, too late for | any alteration to be made in the terms of tho lean which the Government is about to put on the market, this is a suitable time for repeating the advice which we long since offered to the Government, namely, that the war loans should Lave ample options. In future cases the Government should present th'e investing public with the alternatives of taking up the loan on a taxfree or a taxable basis, and it shciulci also provide that investors in previous war loans should be allowed to convert their holdings into the "taxable stock or bonds. To a limited extent the Government has adopted the principle of the first of these two options, hiut wo think that the limit of £500 for 5 per cent, bonds subject to tax ought to bo raised, even if it is not altogether removed. The Commonwealth Government has seen the -wisdom of following the example of Great Britain in both respects. The loan which is now before the Australian public is a dual issue. Hitherto the Commonwealth's borrowings for war purposes have been at 4§ per cent. ■ free of all income-tax. Tho present loan offers tho same terms to subscribers, but they have the alternative of taking up bonds or stock «t 5 per cent, subject to the Federal income-tax, and no limit is placcd upon the amount which an investor may take up in cither, case. Holders in previous issues of 4} per cent, stock are also given the right to convert into o per cent, stock or bonds of the present issue, but -with a qualification also adopted from the British practice. The amount ,that a subscriber may so convert shall not exceed the amount of cash subscribed to the present issue. This condition may appear to be of small advantage to the small investor, who may have little or nci new i:ash for investment in addition to his holding in earlier issues, but the " Insurance and Banking Record" thinks that the small holder may be able, by borrowing or. otherwise, to arrange tho matter. On occasion, Sir Joseph "Ward has shown himself very unwilling to show favour to suggestions which ultimately ho had to adopt, and in tho present case we feel certain that ultimately he will realise tho expediency of altering the terms of tho warlorui issues in the directions we have indicated