THE WAR LOAN

Dominion, Volume 10, Issue 3163, 15 August 1917, Page 5

THE WAR LOAN

POST OFFICE SCHEME

FOR SMALL INVESTORS

STATEMENT BY THE TREASURER

In the House of Representatives yesterday afternoon Sir Joseph Ward made a statement regarding tho proposals for receiving war loan investments through the Post Office. Sir Joseph Ward said that tlie Post Office would issue certificates with a currency of iive yeaTS and ten years. The five years' certificates would lie sold at the saniQ rates as for tho last loan—a £\ certificate for lfo.. a ilO certificate for .£B, and a .£IOO certificate for iCSO. Tho ton years' certificate's would bo sold as follows:—A Ju certificate for 135., a JJIO certificato for -£(J 10s., and a .£IOO certificate for .£GS. For tho benofit of tlioso small, investors for whom this form of investment was not suitable provision was inado to enable anyoto under (crtain conditions to apply to tho Post Office for amounts up to .£SOO at the rate of 5 per cent, payable half-yearly. This interest would not bo free of incomo tax. The reason for this was to ensure that only people of small means could obtain tho" benefit of tho 5 per cent, rates. Applicants for loan on these terms would bo required to sign a declaration that they were not income tax payers. The currency of this section of tho loan would be ten years. ' Sir John JSndlay: Will you allow small investors in tho last loan to transfer? Sir Joseph Ward said that all tho small investors in tho last loan had taken up commuted certificates. Ho would, however, moke provision to allow thoso who wished to transfer to this loan for tin years at 5 per cent, do so. It vas very important, •ho continued, that peoplo should understand that theso investments were open to small investors only. He had found ont that ono person had invested .£14,000 in commuted certificates ill the Post Office: -Tho object was, of course, to havo only a short-term investment. Dr. Thacker: You ought to l.avo him on Somes Island!

Sir Joseph Ward said that this wis tho reason why tho Government asked that tiny person applying for_ 5 per cent, bonds should sign a declaration that he was not an income tax payer. Dr. Newman asked whether the Treasurer was likely to havo arrangements made with tho banks by which the banks would lend money to persons who w:ehed to tako up money in the loan. • Supposing a man had ,£IOO and wished to ttko up i£looo in tho loan, would the bunks lend him the monev at a certain rato arranged for? In Ehgland when the Victory Loan was floated somo insurance companies mado considerable advances to investors in tho loan. If a man paid -£10(1 down tho companies would advance him .£9OO for twenty years and insure his lifo at tlio same time.. Ho would suggest to tho Treasurer that this arrangemont, which worked very well in England, should be mado with tho insurance companies here. Another suggestion he had heard made by . business mon was ithat the second section of the loan should bo issued Vbout March next,' after tho harvest and shearing were over. If this, wero done tho loan would have a much better chance of success than if it wero issued in December and January. Sir Josoph Ward said that tho banks had agreed to allow advances _at a reasonable rate to clients who desired to invest in the loan. All tho banks had agreed to this. Tho rate was not to bo more than 5 J'per cent. _ , Dr. Newman: Quito satisfactory, sir. Sir Joseph Ward said, replying to the second part of the question, that tho 60hemo by which the insurance companies worked in England was mado by tho voluntary 'act* of the companies. If any companies operating in_ New Zealand wished to adopt a similar scheme they would bo given every opportunity of doing so. In the taxing Bill honourable members would find the proposals to compel those people who had not done their duty to invest in tlio loan. As to tho suggestion as to the next- loan being floated in Man;h, the date of issue would depend on. the amount of expenditure actually paid out between now and that time. At present it appeared, to him that the money raised in {he'first section of the loan would last until February. If this proved to bo tho caso the Government could arrange for a. month's accommodation in order to be able to offer tho loan at a time when money was plentiful. . Mr. .E. Newman asked on what date tho Government would accept money. Would the Government accept tho full amount of the subscription in ono sum? Sir Joseph Ward said that tho date for the closing of the loan was September 3. Applications might bo mado to invest in one sum. Investments of largo amounts would be spread over four payments —25 per cent, on' application, 25 Jer cent, on November 1, 25 per cent, on anuary 1, and 25 per cent, on March 1. Mr. Newman: Would you accept as much as .£IO,OOO in a lump sum ? . Sir Joseph Ward: I should say wo could tako up to JC50.000. The investors would havo to tako interest from Septem. ber 3 only, not before.

PROSPECTUS OUT TO-DAY SUMMARY OF CONTENTS, The prospectus ,of the : War Loan will be issued this afternoon. The loan will be of .£12,000,000, tho price of issue will be par, and the term of the loan 21 years. * The subscription list will bo closed on Monday, September 3. It will take the form either of inscribed stock or bearer bonds, at the option of tho subscriber. A million pounds of the loan will be reserved, for-poisons who desire to invest securities which will bo available ■for payment 'of New Zealand death duties. Tlieso securities will not bo transferable, but may bo exchanged at tho Treasury for other available securities, if so desired, and application for this class of security must be specially marked. Trustees may invest funds, in tho loan. Applications will not be accepted for less than .£IOO, but small investors may subscribo sums from «£1 to £500 for a period of five to ton years through the Post Office. The lpan will be repaid at par on November 15, 1938. 'Interest will be half-yearly, on May 15 and November 15. Lodgments may be mado by fully-paid subscriptions and big instalments, in four payments Of 25 per cent, on, application, 25 per cent, on November 1. 25 per cent, on January 4, 1918, and 25 per cent, on March 1, 1918. No extra interest is payable on instalments paid in advance. If default is made in the payment of any instalment, tlio instalments previously paid will bo liable to forfeiture.

Holders of war bonds in tho iC10,000,000 loan issued last year will have tho right to convert into inscribed stock, with currency. to November, 1938, at any timo between September 3, 1917, and March 1, 1918. ' Arrangements have been made under which tho banks have, agreed to allow advances a.t reasonable rat© of interest to clients who desire to invest in loan but who havo not tho ready money to enable tliem to do so within tho timo prescribed. ■ • _ . Arrangements will bo mado for New Zealaud War Loan securities to bo quoted on tho London Stock Exchange as soon after, the war. as tho British Chancellor of tho Exchequer agrees. Registered sharobrokers will be a 'J ed a commission of ss. per «£JOO on allotments made in respect of applications for this issue bearing their.stamp, ana forwarded to tho Treasury Tinder cover of memorandum-- signed bv the sharebroker. No commission "will be allowed in respect of applications cn forms 1 which have not been printed by the Government Printer, or on applications not j forwarded as aforesaid. • I Applications will close on Monday. 'September 3, 1917, but # tho Minister of finance reserves tho Tight to close a prior date or io extend the Pp r iwl._