FINANCIAL NOTES.
Apart altogether from any effect produced by the conclusion of the strike, there is no doubt that gilt-edged securities have been stimulated, and justly stimulated, by the important conversion operation announced to-day. Briefly stated, the offer is being made to holders of the existing 5 per cent. War Loan to convert—up to the amount of £200,000,000 into a new 4i per cent. Loan dated 1940-44. Each holder is to have offered to him £103 in new stock, as compared with £100 in the old 5 per cent. stock. The old 5 per cent. War Loan, it may be recalled, is dated 1929 to 1947. In other words, the Government has the right to repay at par five years hence, and consequently a good many holders of the War Loan may welcome the opportunity of converting into a loan which cannot, at all events, be redeemed for 16 years, and I think it will be found that the oppor- tunity to convert will be fairly well taken advantage of.
* * * * From the Government's point of view, on the other hand, there can be no question as to the wbdom of the policy of attempting to convert, for the 5 per cent. War Loan exceeds £2,000,000,000 in amount, which is far too great a total to have falling due on a particular date. The market, therefore, is pleased that the Labour Govern- ment is, in this matter at all events, adopting a wise and sound policy. All gilt-edged securities have responded because they see in the move an attempt to raise the standard of the National Credit, and in that respect the moment chosen for the operation is a good one, because, as I show elsewhere, the position of the National Accounts is very much more favourable than at one time seemed possible. Moreover, it is in the interests of the taxpayer that we should gradually get the annual service on the Debt reduced, and in this present operation the Labour Government seems likely to have a useful opportunity of noting that, whereas a talk of any rapid debt redemption through a Capital Levy reacts unfavourably upon the National Credit, gradually and skilfully prepared con- version loans have quite the opposite effect, albeit the final net result should be to relieve the taxpayer by reducing the charge on the Debt.
A favourable point in connexion with the maintenance of the dividend of 15 per cent. on the Ordinary Shares of the City of London Electric Lighting Company is that it has been achieved in spite of considerable concessions to consumers, and even in spite of a slight decline in the gross profits. The average price per unit was less than half the amount the company is entitled to charge under its orders, and a great increase is to be noted in the volume of units sold.
It is satisfactory to be able to record that the long outstanding points at issue between the Queensland Government and the pastoral leaseholders in that country have been settled on terms which are declared to be satisfactory to both parties. Without entering again into the merits of this dispute, it is sufficient to say that because sanctity of contract was held to be involved by the passing of the Queensland Land Act Amendment Act, Queensland credit has been affected-a matter of the greater consideration because there is a good deal of Queensland Debt maturing within the next eighteen months. Now, however, that this misunderstanding has been cleared out of the way there will, of course, be no difficulty in Queensland making the necessary arrangements for the renewal of these obligations. This, indeed, has been among the favourable influences operat- ing during the past week, for. it would--have been most regrettable if the situation had not been cleared up prompt and in a manner not merely satisfactory to the pastoral leaseholders, but favourable to the credit of Queensland. The City, however,- has felt convinced that when Mr. Theodore came to this country and the facts were clearly placed before him, he could scarcely fail to perceive the justice of the claims made. That expectation has now been fulfilled.
A. W. K.
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