AUSTRALIAN INTEREST RATES.

Hawke's Bay Herald-Tribune, Issue 78, 19 April 1937, Page 6

AUSTRALIAN INTEREST RATES.

Word comes from Australia that the Commonwealth Government ptirposes fioating another interiLal loan of some £7^-miIlion, mainly for the pxoseention of public works in the various States. What ehiefly iinterests US he're in conneetion with it are- the terms upon which it is to be offered for public subscription — a face rate of 3f per cent., the £100 bonds being sold for £99 5/-. These are somewhat Eke conditions as those upon which. a loan of like amount was plaeed some four months ago, the diffexence in terms being of such a nature only as made the over-all return on the investment a very Iittle less. In each case it comes to only a few pence less than 4 per cent. On the face of things this compares unfavourably with the rates at which our own Government was recently able to carxy through a mixed cash and conversion loan. But when we look for the causes behind the diffexence the reasons for congratulation on our own part are pxetty badly discounted. A couple of years ago Australia was able to float her internal loan's on quite as good terms as is New Zealand now, indeed, on soxo,ewhat better. Since thep, however, Australia has made wonderful progress in the recovery of her industrial and commercial activity. The. result has been that a great part of the private capital then lying idle has been redirected into productive, profitable and really pxosperity pxomoting avenues. Thus the volume of money available for investment on ''giitedged" securities has been greatiy diminished and better terms have to be offered for it. Not so here, however, where private capital is being given no encouragement to launch out, is, indeed, being threatened in every possible direction — heavier taxation, accompanied by restraints, restrictions and prohibitions of all hinds and ihe "prowise" of more to foliow. What wonder then if capital that might be employed in promoting permanent wage-paying industries still, in New Zealand, prefers to seek the saf cty of Htate securities, with the taxpayers ' guarantec behind them? It is a noteworthy thing that, while the shares and stock of Austrulian industrial conccrns are in keen domand at advanced prices, about tho only ones in tho Doniinioi. sliowing any like decided xnovement are those of the brewery companies. In one case these, certainly, nave gone up by about 15 per cent. within the last few months. Thus has our biggest monopoly been fostered.