A LOAN IN LONDON

Hokitika Guardian, 4 May 1927, Page 4

A LOAN IN LONDON

(Lyttelton “Times.”)

The Government lias taken the necessary steps to place a loan of KPVMO on the Don-ton market. A year ago a loan lor a similar amount was successfully i'oaled, the applications covering the issue nearly twentyfold, hut it was soon known that many operators had applied for more than they required in order to got a larger share than they otherwise would. The prompt operations ol these “stags” showed that the issue had been made the medium of heavy speculative buying. The terms of the loan now underwritten differ from those of last year in that it will he issued at 99. V instead of 98}, thus reducing the return to investors, with redemption, from £5 2s Gd to £5 Os lOd. The issued price, as the Minister of Finance has pointed out, is higher than that of recent Australian loans, hut it might he added below that at which local bodies in Britain are able to secure substantial sums. While it is not known what additions were mucle to the National Debt last year, beyond the £6,000,090 loan floated in London, the total should show a considerable reduction on that of the preceding year. There have been no loans placed on the Australian market, as was the case not long ago, and apparently, the condition of the local market is not deemed to he favourable for another Government loan. If there should be a gradual tapering off of overseas loans the Government will he following the candid advice of men well qualified to express an opinion. All* W. Peroller Reeves, in an address to bank shareholders in London, stated that New Zealand Government’s real difficulty was “the necessity of limiting borrowing,” and lie added that the pace of recent years had been “too hot to last.”

One of the effects of these operations was plainly stated by the Minister of Defence before he entered the Cabinet. Discussing loan transactions Mr Rolleston said that the loans raised ip London of recent' years were “just about the amount of our ininterest bill in London out of our fresh borrowings.” And lie proceeded to show that that sort of thing had the effect of increasing the volume of imports, and quoted, pertinently, a statement in the Budget that the expenditure of Joan money created a spending power “that tends to engender public and private extravagance,”

Since that admission was made the Government has proceeded to <uld over £11,090.093 to the National Debt in one year, making the increase in the six years 1920-6, £37,684,723. Last year at least £6,000,000 was added and thus early in the current year a loan for another £6,000,000 is duly arranged. The allocation of the latest loan may cause pointed inquiries, for no provision is made for further advances to settlers or workers. Various: activities of the Public .Works Department will be responsible for the hulk of the money, and the items specified by the Minister, for the most part, are generally classified as directly productive. But it seems to he clear that, despite promises of careful economy and savings to he effected, the borrowing proclivities of the Government show no sign' of failing.