The Daily News. MONDAY, JUNE 14, 1920. FORTHCOMING LOANS.

Taranaki Daily News, 14 June 1920, Page 4

The Daily News. MONDAY, JUNE 14, 1920. FORTHCOMING LOANS.

It has been so evident the Government would have to raise further loans in the Dominion, that Mr. Massey's announcement of his intention to ask for subscriptions to a two million loan for public works will occasion no surprise, except possibly as to its modest sum. It would seem that as a much larger loan is to be placed on the local market later, it is good policy to test the feeling of investors relative to the terms of a small loan. Money has hardened since the last-Government loan was raised in the Dominion, and both the terms of issue afd the rates of interest have undergone a change on the London market, where it would be impossible to borrow at thing like 5 per cent, —the rate o. interest fixed by Mr. Massey for the forthcoming loan —especially as income tax is payable on the dividends. There is ample money available in the Dbminion for all national and industrial requirements, but whether the owners of this unemployed capital will.feel inclined to accept only five per cent, interest remains to be seen. Much will depend on the extent to which the Premier can .arouse the patriotism of the capitalists, and special efforts it> this direction might well be employed. "VVe cannot conceive it possible that this small loan can fail to be over-subscribed. It is well known that a vigorous public works policy is impei*ative in view of facilitating the settlement of land, the development of the Dominion's resources, and ensuring greater production. Local loan? have the great advantage of keeping money in the country instead of sending it abroad, except for such labor-saving plant and machipery that cannot be obtained here. A moment's reflection should suffice to convince those who have money to lend that the first claim should be that of their country's advancement. Unde.v the circumstances the terms offered are fair, as every effort should be made to keep down taxation to the lowest possible amount, and, as lenders are taxpayers, this phase of the matter should appeal to them. According to a recent Ministerial statement, seventynine millions of money was raise;! locally by the Government during the war. This is a record that is creditable alike to the people and the policy of the Government in resorting to local loans. In comparison with Britain and America the taxation of war profits in New Zealand has been very light, hence the large amount of idle money. The only point that may affect some probable lenders is whether the money will be spent to advantage and not frittered away. Merely to announce that the loan is for public .works does not appear to be sufficient. Confidence would more likely to be inspired if the Government were to state the particular works contemplated, or, better still, evolve a sound public works policy and lay it before the public. There has been in the past an insufficiency of frankness on many matters which the Government might and should have taken the people into their confidence. Now that investors in national loans have become a necessity, there should be given in the prospectus of the loan the full information that is contained in a company's prospectus, or in loan proposals by a public body. It must also be remembered that all loans raised locally, especially at the present time, will effect a large saving in flotation expenses as compared with loaniJ raised on the Home market. Regarded from all points of view this two million loan should be a success, but it may be necessary for the Government to state that subsequent loans to be raised this year will be on precisely the same terms, so that no advantage will be gained by holding off for high-er-interest. The Government has the whip hand if it becomes neces&iry to use it, by resorting to taxation of wealth, so the alternative should be a potent factor in unloosing the purse strings. The required money must be raised in one way or another, and the loan proposal is by far the most fitting. The self-reliance policy which the people of the Dominion have endorsed in the past is not likely to be discarded now; rather is it to be expected that it will be further amplified if the right means are taken to develop this excellent spirit which will see the country through its financial and other troubles.