INTERNAL LOAN

Rotorua Morning Post, Volume 2, Issue 393, 30 November 1932, Page 7

INTERNAL LOAN

SENTIMENTAL APPEAL THE PIYOT OF SUCCESS. j AUTHORITIES' OPINIONS. Christchurch, Saturday. A big internial loan in New Zealand, whether as a conversion loan or as a ' means of providing an export bounty, 1 at a low rate of interest, would suc- ' ceed only by its sentimental appeal, Christchurch businessmen said today, eommenting on the latest^ trend of events in Wellington. There was a very large amount of money on fixed j deposit with the banks in New Zea- | land, but so wide had been the loss of 1 confidenoe among the investing pnblic that some very definite impulse would be required to release this money. 't "There will be no general investment in giltwedged securities or industrials till the puhlic feels that the Government is likely to give it sound financial administration," one man said. i The rate generally suggested as a minimum for a conversion loan was 4 per cent. Below that figure, .it was thought, there would be little pros- j pect, considering the tone of puhlic 1 feeling, of floating a loan. | An official of one big lending insti- ' tution thought that unquestionably a j proportion of the people with capital to invest would Hespond to an appeal for conversion, or for subscription to a loan at a low rate, if they did not have to sacrffice, iat the most, more than 1 per cent. The Government was paying 5 per cent, now, and this man's views was that per cent. would have to be the new rate offered. "If the appeal were properly staged and managed, I think there would be a surprisingly good response,' he said. There was no reason why an internal loan should fail if the holdtars of fixed- dep'osits and other money s for investment had genuine reason to feel that by subscribing to it th'ey were stabilising conditions and assistdng in the rtehahilitation of New Zealand, a broker remarked. "We must do something pretty desperate, anyhow. Conversion seems to be in thfa air. We have precedents for a conversion loan dn Australia land Britain._ The sentimental appeal t6 the patriotism of the people would be the pivot on which such a project swung to success or failure, of course. Not less than 4 per cent. should be ofifered — and the Government Is not doing much business at the moment with an ordinary issue at 5 per cent. It was assumed that one reason why the Government would wish to avoid an internal loan was that the step would inflict hardship on the smalLinvestor class. Small investors were

widely spread, and where people had invested life savings in Government securities, reditction in their intierest mdght be crippling.