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THE WAR LOAN. t

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THE WAR LOAN. t BOON FOR SMALL INVESTORS. I Mr. McKenna, Chancellor of the Ex-I chequer, introduced the Government War Loan scheme on Monday in the House of Commons. The salient features are as follows:— The Loan is to be issued at par, bearing interest at 4t per cent. Holders of the Old War Loan Stock and Consols will be entitled on subscribing to "the new Loan in cash to convert an equivalent amount of their holdings into new Stock on advantageous terms. Small investors can secure Bonds of S5 and E25 through the Post Office, bearing 44 per cent. inteeret. Smaller investors can secure through the Poet dffice 5s. vouchers, the interest being 5 per cent. per annum for each com- plete month until S5 is paid, when a 4i per cent. Bond will be issued. Trade unions, friendly societies, and works will also be entitled to issue these vouchers. The total amount for each individual will be subject to a legal limit. Though the total amount of the loan is unlimited, it is not expected to exceed £ 910,000,000. The scheme was sanctioned by the House, and the prospectus issued by the Bank of England is published The War Deficit. I The War Deficit has accumulated thus: I x Up to March 31 334,000,000 Since that date 184,000,000 Total to-day 518,000,000 This deficit has been met thus: x Proceeds of Nov. Loan 331,000,000 Exchequer Bonds 43,000,000 Treasury Bills I. 235,000,000 Total 614,000,000 Less Repayment of South Africa War Loan 16,500,000 Net borrowings 597,500,000 In round numbers there is thus a sur- 1, plus, still unspent, of £ 80.000,000. But against this surplus must be set the lia- j bility of the Bank of England for bills of exchange, which liability stood at 12C millions. It is now reduced below Mr. Lloyd George's net estimate of 50 mil- Jjons, and this overdraft is to be repaid to the Bank. The discharge of the debt will assist th3 exchanges and help the, Bank to maintain the gold reserve. Post Office Issues. The new loan is to be issued by three methods. (1) Through the Bank of England by tile 9100. (2) Through Post Offices by Bonds cf £ 5 and S25 denomination. (3) By means of War Loam Vouchers of 5s., on sale at Post Offices, and II. through Trade Unions, Friendly Societies, and Works Offices. On these latter vouchers 5 per cent. interest, or 3d per 5s., will be allowed per annum for every complete month that the voucher is held. That is, one farthing a month will be paid as interest on every 5s. voucher. If a voucher is cashed, no interest is paid, but when 25 vouchers have been accumulated they may be exchanged for one C5 bond, carrying interest at 4i per cent. The additional -1 per cent. on vouchers is compensation for loss of interest on in- complete months. The amount to be sub- scribed through vouchers by any one person will be limited by law. Lists for ordinary subscription to the War Loan close on July 10. Mr. McKenna said plainly that he did not expect to receive Sl.000,000,000, and did not really want as much as this. He did not expect to receive very much from [ndia and the Dominions, which are at present borrowers rather than lenders. I-. Small Investors. Subscription through the Post Office! may be stopped at the discretion of the Government, and small investors should therefore apply without delay. If they take £5 at a time (without troubling about vouchers) they will save 8d. and only pay £ 4 19s. 4d. Persons subscribing through vouchers will receive Is. bonus when their £5 is complete. The following table shows how vouchers may be accumulated:— Complete Intst. ihtrchaees in £ a. months. d. 1 10 5 n 1 15 5 7 Angust 1 10 3 7i September 2 10 2 5 October 10 1 1 November 1 15 — — £11 0 28. 4d. The investor may then receive on December 1st the following: (1) £10 of stock (bonds) oarrying in- terest at 4 £ per cent. £ s. d. Ki;(2) Cash interest 0 2 4 .(3) CAwh bonus 0 2 0 .1 (4) Voucher balance 10 0 The cash may be put into the Post Office Savings Bank or it may be drawn out for personal use, and the voucher balance may be held for further invest- ment in stock, or changed into cash. Safeguarding Investors. Another important attraction of the new proposals remains to bo mentioned. It is this-that if any further loan should be found necessary during the war, and if such a loan has to be brought out at a higher rate than 4!, the Government pro- mise to take the stock of the present loan at par for the purpose of reinvestment. That feature was criticised by Sir Frede- rick Banbury, who thought that investors should be held to their bargains and not protected against loss. But the general feeling seemed to be that he who answers his country's appeal now ought not to be in a worse position than the man who looks at these War Loans from a strictly financial and business point of view. Mr. McKenna in most earnest language begged the country to remember that this appeal is to patriotism and that the country's needs are very urgent. At the game time he very justly praised the quality of the wares he has to sell, observ- ing that a Four and Half per Cent. Bri- tish Government Loan is a golden oppor- tunity for the investor, such as may never occur again. Now is the moment!" he said. The scheme was well received by the House, and, in explaining it. Mr. McKenna displayed a perfect lucidity. ■■

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