The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY DECEMBER 30, 1927. THE BRITISH PUBLIC DEBT.

Hokitika Guardian, 30 December 1927, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY DECEMBER 30, 1927. THE BRITISH PUBLIC DEBT.

Tire Government of Great Britain, com. meats a New York financial journal, has been engaged recently in several important refunding operations, which in view of the extensive operations of the United States Treasury in that line are of interest on both sides of tho water. The debt of the United Kingdom is very much larger than tho debt of tho United States, and when tho war ended it consisted, like the United States to a great extent of short term obligations, which the Treasury has been obliged to meet ehielly

by the issue of new securities. The British debt reached the peak in December, 1919, with a total of .67,831.,744,000 which compares with £619,770,(XX) on April Ist. 1911. On March 31st. 1927. this had been I'ednrrd to £7.622.915,562, according to book account, but allowance should be made also for £68,327,605, representing bonds which have been paid into the Treasury on account of death duties and not yet cancelled The actual reduction of principal, therefore, lias been over £277,000,000. The reduction of principal would have been considerably larger but for the policy which the Treasury seems lo have generally followed of making a low interest rate

on long term conversion loans, whirl necessitates offering them below par The total results of all eoiiversioi

operations lias been an increase ol I £284,000.000 in principal and a .saving of £1,101,000 in annual interest charges. The failure to accomplish more important savings hy conver- | sion operations has hecn due to the | great volume of maturities to he handled and the fact that current in- ! terest rates are hut little if at all be- | low the rates home hy the war issues, j The hitter were taken hy the public in j response to an appeal to patriotism. | hut the conversion issues must he pine* j cd on an investment basis. The current rate in the London market upon .00 mpn rati vel.v short term Treasury obligations is shown h.v the results of a sale on September 13th. of £65.000.000 of 41 per cent, bonds, maturing in 1931 and redeemable on one year's notice after January Ist. 1029. at tlie option of either the holder or the Government. These bonds were sold u|xin invited tenders at an average price of £9O 0s 0d per £IOO, making the yield to the curliest redemption date slightly under 5 per cent. The total provision for debt reduction from revenue and miscellaneous receipts from 1921 to 1920 was £(08.000,000. This is a very

great achievement in reduction, and excepting that of the United States in the same period, never has had a parallel. In the early years of the period large budget surpluses were available, hut since the budget estimates have been made with greater exactness the main reliance has been upon the statutory sinking fund of £50.000,000. Though by law this amount must lie provided annualy from revenue for the cancellation of debt, its operations may lie partly nullified by creation of new short term debt to meet budget deficits, and this has occurred in the last two years, but for only part of the stated amount and to meet contingencies not 111 sight when the budgets were prepared. In the fiscal year 192.5-1926 it was due to a subsidy to the coal industry, paid by the Government to avert a -strike, and in 1926-1927 the deficit was due to the coal strike, which seriously affected the public revenues.