LOAN OPERATIONS

Hokitika Guardian, 14 January 1929, Page 2

LOAN OPERATIONS

DECENT FLOTATION. , STATEMENT 15V SIH JOSEPH WA.IU). WELLINGTON, Jan. 11. Sir Joseph Ward, in a statement concerning the loan just floated, says lie was unalile to make any aniioiiucenient until to-day, as it would lie unwise publicly to discuss the details, which would have hampered the underwriters in the big responsibility lliev had undertaken.

lie was surprised that parliamentarians should Itave pressed tor details that only a lull sense of his responsibilities stopped him from giving. ■‘l may now say that when 1 took ofliee on December 13 I became aware of the whole posit ion,’’ he said. “] was (ptite aware before taking ofliee of the whole of the maturities that had to he provided for by way of eonversion; I had no knowledge whatever. ot what the proposals of the .Minister of Finance (my immediate predecessor) were, but I found that he had held over his final decision. The proposals that had been made were for a cash loan of live millions, and conversion of fen millions of the 1929 maturities to be made in the present month. The cash issue of Jive millions was to cover requirements up to .March 31, 1930. That arrangement meant, therefore, no borrowing in London during the financial year 1929-30.

“T came to the conclusion, after mature consideration, reluctantly hut definitely, that those proposals would not meet the requirements of the country. and 1 had. as the responsibility of financing the country then rested upon me. to make up my mind whether to make a material alteration in the proposals, and this I finally decided to do.

“That was, to increase the amount of the cash to seven millions, and the amount for conversion to twelve millions. As I came into office pledged to at once put in hand four important railway lines and provide for State advances as well as carry on other works, the proposition I found existing obviously gave me some concern, in view of the policy I had promised the country, and 1 had to reconsider my plans as far as immediate action was concerned, in order to assure railway extension proposals and State advances to settlers, I decided to increase the loan from live millions to seven millions for public works, including railway construction' and improvements, and hydro - electric schemes, i may add that I had tentatively arranged, if required, to ob-

tain an additional two millions locally to ensure that- ail purposes that I had publicly laid down in my policy a.s submitted to the country* would he provided for. ! “Among many matters that outsiders and the whole of my critics knew little or nothing of was an important consideration affecting London borrowing. In the coming year an Imperial War Loan conversion of about two thousand millions is to lie dealt with, and there is also the uncertain effect on London finance of the changing conditions of the American market, which in recent times, as anyone who takes an interest in matters of the kind knows, are very unusual, both in their magnitude and variation, and are a great factor nowadyas in directly and indirectly affecting London at various times.

“A new -If per edit cash loan of £7.039,090 maturing in 1948-1938, is being issued at £‘9s, which will return investors about £1 His 4d per cent, allowing for redemption of the discount on issue over a period of 29 years, a.s compared with £1 19s 8d in the ease of the last 4) per cent loan of £3,999.000 issued in May last at £94 10s, maturing in 1947. “The £12.009.090 conversion loan now offered is at £lO4 3s for every £lO9 of old stock, giving investors a return of approximately £4 13s 3d per cent allowing for the redemption of the premium over the period, compared with £4 His ,10d in the case of the £3.000,000 conversion in May last, when £lO4 10s of the new 4i per cent stock was offered for every £IOO of the old 4 per cent stock. “It will bo seen, therefore, that notwithstanding many factors that may have operated adversely, the transaction is comparatively better than the previous loan, which broke tile 5 per cent rate obtaining in London for some years previously, and it is reasonable to claim that the country’s high credit has again merited the confidence of the London market, particularly as the £7,090,009 cash issued has been fully .subscribed. That the loan .lias had a good effect throughout New Zealand is hevond all question, as communications to me yesterday enthusiastically acclaim. As typical of them I may add lliat one large firm said: ‘Have cabled London doubling our orders. We feel that there arc prosperous times ahead of New Zealand.' ”

Sir Joseph Ward said he had no comment to make about one or two of the Press criticisms. It had been quite apparent for years that there were some people who put politics before everything, and would apparently lie delighted to see a breakdown in great financial operations that directly affected, and, if successful, benefited every class of people in tile* country quite irrespective of their polities. What one did marvel at, he added, was the utter lack of judgment and discernment shown by some who professed to lead or guide public opinion, and their obvious want of knowledge in taking a fair view of anything, especially if it emanated from a political opponent. “I took an opportunity in December,” lie said, “of advising the London Press and the High Commissioner that the rumours about the proposal applying to the raising of £70,090,000 in one year were quite untrue. As proof that f anticipated any such rumours. I cabled on December 20 to the London ■Press a statement of my proposals. A.s a result the following is a quotation cabled to me from the ‘Evening Standard,’ dated December 20, one of London’s leading journals, which published a statement of its own accord, and that is the best answer to the erroneous rumours that were circulated at the time:—‘lt may be mentioned that it now is accepted by the London market that Sir Joseph Ward, the new Prime Minister, of New Zealand. fully realises the importance of maintaining New Zealand credit here, and that lie will do nothing which will weaken the high esteem in which that Dominion’s securities are hold by British investors.’ !< The successful result of these very important and large transactions after my proposals received the scrutiny of the highest London financial authorities, who are tin* greatest financial critics in the world, indicates clearly that one need not Ibel in the least perturbed by sonic of the party statements that wore promulgated here.”