LONDON LOAN

Waikato Times, Volume 119, Issue 19884, 13 May 1936, Page 6

LONDON LOAN

The remarkable success of the conversion loan last year, when over $210,000,000 was applied for in cash subscriptions, may cause some people to regard the latest transaction as disappointing. The result, so far as the Dominion is concerned, is not affected by the failure of the market to absorb the whole issue, because the underwriters will take up the balance, and New Zealand will be able to reduce its interest bill on overseas loans by a substantial sum. In addition to the saving made by a reduction of the interest charge on £4,000,000 from 6 per cent. to about £3 25, there will be the further saving due to the redemption of nearly £2,000,000 from funds available.

It was unfortunate for the Minister of Finance that the issue came at a time when the money market was disturbed by the unset~ tled state of international affairs. Recent reports from London have stressed the fact that the tone of the market was week, not because of monetary or trade troubles but solely because of political factors in the international sphere. In the circumstances the Minister of Finance has good reason to be satisfied with the outcome of the first big transation he has had to negotiate overseas. The credit of New Zealnnd is undoubted, and the benefits are of a tangible nature. Mr Nash naturally regards the results of the loan as satisfactory, and a. “tribute to both Government and people.” There was no need to make any distinction. The Dominion is the unit, and by balancing its Budget and maintaining a. favourable trade position it has held the confidence of the British investors.

The loan marks the end of conversion operations for some years to come. That is unfortunate because, if market conditions were attractive and the Dominion were in a position to deal with other issues, larger savings could undoubtedly be effected. The duty of the Government is to maintain the credit of the country by sound finance, ensure the, continuance of the confidence stressed by M - Nash, and if possible so manage financial affairs that further reductions of o\'(‘l'>‘(‘lls debts may be possible from time to time.