The Daily News. THURSDAY, JANUARY 29, 1914. SHORT-DATED LOANS.

Taranaki Daily News, Volume LVI, Issue 180, 29 January 1914, Page 4

The Daily News. THURSDAY, JANUARY 29, 1914. SHORT-DATED LOANS.

It was almost inevitable that the sue | cess of the Victoria loan -honld have revived the controversy as to the merits or demerits of short-dated loan,, that look place on the occasion of Mr. Allen's loan notation when in Kngland. .Speaking to a Wellington I'o-t reporter , on Friday, Sir Joseph Ward pointed out i that the success of the Victorian loan emphasised his contention that longdated loans were not alwavs tin; mosl favorable to borrowers. "1 am not," l'e said, "in the least surprised at the ' position disclosed in connection with the I recent Victorian loan. I !iau- held all llirough, and have expressed myself on more than one occasion, that it was ridiculous to suppose, with the large accumulations of money going on in the Old Country, that by any unnatural or forced processes a rate of interest higher than the normal one could be maintained for long; and it shows the advisability of this country not rushing into long-dated loans, at a heavy cost", to the country." The ligures quoted I by Sir Joseph Ward as to the enormom amount of money that year by year is 1 invested, or awaiting investment, in (Government or industrial securities, although somewhat astounding to the uninitiated, were founded on actual fuel, ami on his last visit to the <>hl Country there is no doubt that lie made himself acquainted with the then existing state of the money market and its prospects. There is no better authority in New Zealand than Sir Joseph, and his taith in the removal of the iinanchl

sliingeney (hat prevailed at that time has been amply justified .It was, however, only nalural that the lion. James Allen should have something io say in reply to Sir Joseph Ward's optimism as evidenced in his remarks to Ihe Post's representative, and it was characteristic of the Colonial Treasurer to throw a cold water douche on Sir Joseph's utterances—lt is all part of the game. Therefore Mr. Allen staled that the improved financial conditions Mere "nothing like to the extent iliat some people think," and he proceeded lo slate that he saw no pro-pec; for some time to come of "our being able lo float a losrn in London a I a lower rate than four per cent." He insisted that there could be no two opinions as to the folly of Xew Zealand entering into short-dated loans such as the late t.'ovemment procured, a- such loans did not get into the hands nf iii e legitimate .investor, but Were take;, up by speculators who were on the look-oul for underwriting fees. Tiii- is a sort of specious argument thai may satisfy some, people, but it ignores ih e fact that short-dated loans are obtained only at times when the money market is unfavorable. That, they' are costly ""is admitted, but the fluctuation- of' the market may, and frequently ,| O , justify a temporary expedient, and by enabling money to he obtained at a cacaper rate there is ultimately a eoii-idcrabte Having. Possible, between the pessimism of Mr. Allen and the optimum of Sir ■it'seph Ward there is to be found a solution of the advantage- and disadvantages of short-dated loan-, but in the light of past transaction-, both of the •New Zealand and Home C.vernments, there is much to- be said in favor of Sir Joseph Ward's contention. Ol

course, it is a case of circumstances slicring cases, ami it j, J u .,- ( . , uiiat a „ ~,,. curate knowledge of linaneial conditions "«'l prospects can alone emmie ; , w « e decision to l„. im . |vnl , lti i; h(l ; ns |n cvitable that will, |) le Colonial Treisurer for the time being ,«„..; Vl . sl Ul , responsibility of making \\ h . ,„, s t ar . rangeinents in hi s power. There j- a uecided element of uncertainty j„ ~,,„. "cetiuii will] loan llotatioii-. .., thai, it : < ««t wise to insist „„ ;iny particular line of action being observed.