LOAN RAISING.

Dominion, Volume 6, Issue 1785, 25 June 1913, Page 6

LOAN RAISING.

ADVANTAGE OF A LONG TEEM. Tho remarks made by Mr. A. jr. Myers, M.P., in liiis speech at Auckland last week as to tlio prospccts of converting tho Mackenzie Government's four and a half million two years' loan on favourable tonus when it falls duo next year wero referred yesterday to the Minister for Finance (the Hon. Jas. Alien). "Tho loan cannot be converted; it will have to bo refloated," said Mr. Allen. "Tho loan is held by large financial speculators who do not want to convert, but want to bo paid oif. This is one of tho evils of the short-dated debenture system. They. do not get into tho hands of tho legitimate investors, but into tlio hands of speculators, who are out for tlio underwriting, brokerage, and other foes which make the short-dated loans very costly." Tho charges, the Minister stated, included. ono per cent, for underwriting, quarter per cent, for tho broker who secures tho underwriter, a quarter per cent, to tho Bank of England for issuing tho loan, a quarter per cent, for other commissions, discounts (which may bo anything), stamp duty ranging from 2s. Gd. per cent, upwards, and. tho cost of advertising, as well as concessions in interest which nearly ' always liavo to bo mado. -"All these charges," said tlio Minister, "have to be paid every time a big loan is floated, and it makes tho system of short-dated loans a suicidal one. When a long-dated loan is raised tlio charges occur only onoe. With my threo million loau, for instance, tlio charges havo lieon paid, but X hnvo done with them for fifty years if I like. With tlio four and a 'half million loan, on tho other hand, tho money will have to )» raised again next year, and all the cliarges referred to will have to be met again. Speculators do not take up tlieso ioans to convert, because, they get more pickings when they are refloated." "The five million loan raised by tho Ward Government," Mr. Allen said, "was a convertible loan, but only ,£1,857,■100 was converted. The remainder has been left as a dead weight for mo to carry." •