THE LOAN.

Taranaki Daily News, 30 June 1921, Page 5

THE LOAN.

PROSPECTS CONSIDERED BRIGHT. ALLOCATION OF THE MONEY. The details of the proposed allocation of the £5,600,000 loan that is being raised by the Prime Minister on behalf of New Zealand in London are not yet available here. The money is going to cost, roughly, 6$ per cent., the 6 per cent, debentures beinv issued at 96 The New Zealand Government has not paid so high a rate of interest since much earlier days, and none of the money borrowed at that rate in the past is still owing. The highest rate of interest paid on the existing public debt is 5 per cent., and the lowest is 3 per cent. The Finance Bill of last year gave the (Government power to borrow £3,500,000 for the development of hydro-electric power, £2,500,000 for other public works, and £600,000 for carrying on the phosphate business in connection with Nauru Island and Ocean Island. The Government is holding other unexpired loan authorities to the amount of several millions, including a loan for education purposes, and the balance of the last soldier settlement loan, so that there would be no difficulty aobut accepting a larger sum than £5,000,000. The allocation, of the money that is being raised is likely to be determined later in the light of actual requirements. Mr. Massey indicated during the Parliamentary session in March that when the loan was raised the Treasury would repay to the Consolidated Fund some of the money that had been transferred from that fund to the Public Works Fund.

It is certain that a large part of the money will be used for public works, including hydro-electric development. Local bodies and power boards throughout New Zealand are pressing the Government for money to enable them to proceed with important works, and the Public Works Department itself can extend its operations on important railways and other undertakings. It is anticipated that the Government will seek to relieve unemployment by moving in these directions rather than by any substantial increase in the provision .for relief works. Viewed from the point of view of the Public Works Department, the £5,000,000 that is sough*, to be borrowed is 'by no means a large sum. The expenditure of the Department has been at the rate of £300,000 a month for some time past, and the commitments that have to be faced for hy-dro-electric power and railways alone would speedily absorb the total amount of the loan.

It is taken for granted in financial circles that the raising of the money is assured. Mr. Massey is going upon the money market at what is regarded in a favorable moment in view of the improvement of the industrial outlook in Britain, and New Zealand’s credit in London is reported to be very good. Financiers have been impressed by the proved ability of the Dominion to carry heavy taxation and produce good national balance-sheets in time of difficulty and stress. —Dominion.