The Daily News. THURSDAY, AUGUST 9, 1917. THE WAR LOAN.

Taranaki Daily News, 9 August 1917, Page 4

The Daily News. THURSDAY, AUGUST 9, 1917. THE WAR LOAN.

Although considerable criticism is being made on the terms of the Dominion's forthcoming war loan, there can be no question as to its necessity. The only right course for New Zealand to take is to relieve the Mother.County to the utmost in its power of all possible financial strain, so that our fiovernmenfc is only acting in accord with the true spirit of the country in raising a further loan in the Dominion. The money is here, a plethora of it, and much of it is lying idle. At a crucial timo like the 'present it would seem to be a grave reflection on our patriotism and progressive policy to have such a vast amount of sleeping funds when money is so urgently needed That there should be a prudent reserve is only right, but •when the very existence of the Empire is at stake is no tune for hoarding, for victory and peace cannot be obtained without a lavish trutpourittg of both blood and treasure. The Miaktgr of jia»«c» ir jwtly con-

dder.t that ho can obtain loc-aliy at \ovsl' one liiiif of tiio twenty-four million loan that has bee.'t dciiidnd upon, as lie is sure that when tiie people know that the only way to preserve New Zealand and enable (ho country to u'd its part in this terrible war, and to preserve it as a British, country, U by raising the money to p<;y the men wlio are lighting at the front, the men who arc going there, ami all the heavy expense.:? incidental thereto. That money must be forthcoming and it Mv.ul'.l be rank heresy to doubt Unit it will flow into the Dominion exehe-

nuer. It is easy to estimate tlio amount | that will bo required, but when it comes to stating the terms to be offered there are bound to be criticisms and more or less strong objections. The crux of the matter is to be found i:i tho amount of interest, but to this must be added the difficulty concerning income tax. Sir Joseph Ward has decided that in the ligflt of experience, . : interest should be free of income tax and on this basis fixed the inter-', at four and a-half per cent. This course has raised considerable opposition from those who advocate u higher interest which sliould be subject to income tax. Apparently, on the surface, the question is extremely simple, I but, in reality, it is very complex. Eaisiug or lowering the rate of interest on Government securities directly affects the money market as well as industrial activities. T-Uo .Finance Minister has kept this aspect well in mind and one of his objects jn fixing the J,'-, per tent, rate was .j prevent an inflation of interests on commercial, agricultural, industrial and other loans. Then he had to sec fair play with regard to the subscribers to the previous loan so that | they should not be placed at a disadvantage. That also was commendable. There is, of course, another side to the question. The Minister is out to capture the largo fry, those who can contribute in tens of thousands and possibly a million or more. Is it not probable that in face of the graduated income tax a fair number of wealthy capitalists, including lending institutions and insurance offices, would hi changing their present investments and deposits and subscribing to the war loan thus escape paying income tax? Has tho Treasurer allowed for this in his Budget? Can the terms of the loan be adjusted so as to circumvent such.a uiov<vwithout endangering the success of the issue? Those

ure questions which are exercising the minds of many members of Parliament and others. .Sir Joseph Ward contends that a higher rate of nnexempted interest urould not tempt wealthy people to subscribe, and as these are the clients he is catering for he naturally leans to their side. When, however, he quoted the success of the "Victory'' loan wised in Britain, he failed to mention the fact that there were two options before the I Investors. There were two issues—a I live per cent, loan at £9o, whereon the interest was subject to incomo tax, and a four per cent, loan at £IOO free from income tax. Such an alternative was politic, for tho yield from tho first loan, including bonus on redemption in 10-17 was i'j Cs 7d per cent, and the yield, after deducting income tax at five shillings, £4 Is 7d per cent. There was, it is said, an overwhelming preference for the live per cent, issue subject to income tax, for out of the £510,580,000 subscribed through the Bank of England only £22,000/(00 was for the exempted, four per cent. loan. The question arises whether the Dominion should not follow the example of the Motherland and gain considerably thereby. . . - -