5 July 2, For a long time the British Government's idea of attempting the Conversion of its £2,000,000,- 000 Five Per Cent, War Loan has been baulked by the intrusion of unfavourable events. wmtyiast year the national "crisis intervened. Even now there! Ihave been voices counselling lay on the ground that, the Lausanne Conference should be allowed to show its hand or with the object of obtaining a lower rate yield than appeared possible at the present time. Mr. Chamberlain has, with the full support of his colleagues and the approval of the Opposition, taken move forward without lett "1 will" wait on "I dare no! Wisdom counselled delay until this half-year; timidity alone oura be found to justify ad: hherence to delay, any longer. The Government thus are enabled to contemplate the removal of one-third of the internal debt from the basis of a high percentlage of interest and, moreover, immunity from income This should increase the Tres sury collections and should react favourably on the market by {facilitating the floating of issues to finance trade on a lower rate lof interest. It will be noted that Mr, Chamberlain makes a special appeal for forbearance in the City for the next few weeks in floating new loans. This is obviously desirable in order that the position may be allowed to settle down to the results of this gigantic transaction. Reuter's " message set out the state of affairs lucid~ ly. The foreign holdings, the amount of—_ £150-8200 millions, may provide large demands for the cash redemption at par om December 1. This gives the Government time to refinance that part of the loan. Moreover it may quite conceivable induce more foreign holders to become converters than might otherwise be expect-
The move is adventurous. It may have a most favourable psychological effect on the nation chiefly concerned and, also, on the other nations now so anxious at Lausanne, It shows that Great Britain is prepared to proceed with the task of setting her house in order without waiting on hesitations in other countries. There is this also to be remembered: the first fine rapture of the great tional effort has not spent itself entirely and, to change the metaphor, the country is not likely to fail in getting its second wind, but a period of stagnation has been reached. The Budget gave no relief to the income taxpayer. The uncer-fainties of the various phases of the world-crisis have naturally given rise to disappointment and disillusionment. The dread of the budget of 1933 would be oppressive if, no hope could be given to. stir, the unrelieved gloom. Mr. Chamberlain has taken advantage of the Gove ment's improved financial position to deal with the War Loan by one bold stroke. It must inevitably cheer the faint-hearted and give fresh courage to the stalwarts who have, kept. their faith in the country's ability to restore ite financial status. It must be noted that some such scheme has already been partly discounted by the rise of other War bonds to prices above those lof the issue now to be converted. [Chancellor been able to Nevertheless, the fact that the
/announce so clear-cut and sweeping a conversion must be a bull factor of the utmost value. pos: Much depends on market reactions during the next few weeks but there seems reason to believe that the tonic effect on gilt-edged securities generally may be so marked as to make conversion on a large scale a certainty by September.
If Lausanne fails, Mr. Chamberlain will have burdens added his shoulders, but his action in itself may well stimulate in-{fluences in support of Mr. Mac-Donald's superhuman efforts to [steer the Conference into the channel of. success, He is Jadmittedly making an appeal to the patriotism of some 3,000,000 bondholders. Fortunately the Government have learnt that such an appeal can be made without any charge of lunacy being levelled against its authors, Patriotism in reality not making a bad bargain, for patriotism implies a profound'
Text read from the printed page and cleaned; old type leaves the occasional error.