§ 39. Mr. John Hallasked the Chancellor of the Exchequer if he will circulate in the OFFICIAL REPORT the terms in which his predecessor invited holders of five per cent. War Loan to convert their holdings into three and a half per cent. stock in 1932.
§ Mr. BarberYes, Sir, I am arranging for the circulation in the OFFICIAL REPORT of the text of the letter which the then Chancellor of the Exchequer wrote to all stockholders, together with the explanatory memorandum and the formal announcement setting out the terms of conversion and redemption, which were enclosed with that letter.
§ Following are the documents:
§ F.13047/2.
§ Chancellor of the Exchequer,
§ Treasury Chambers,
§ Whitehall, S.W.
§ 30th June, 1932.
§ Sir or Madam,
§ With this letter you will find papers relating to the Conversion of the War Loan.
§ For nearly three years the Government of the day have been entitled under the terms of the original prospectus to give notice at any time to repay the Loan, and Parliament included in the Finance Act of last Autumn a variety of provisions preparing the way for a conversion scheme.
§ The Government have now given notice to repay the holdings of those who apply for repayment, but at the same time they invite all holders of the Loan to continue in it on the new terms. The principal change from the point of view of the ordinary investor is the reduction of the rate of interest. The special privilege of payment of the dividends without deduction of Income Tax at the source is being continued.
§ The Government ask you to notify as soon as possible your assent to continue in the Loan. If you do so not later than the 31st July next you will be entitled to a cash bonus at the rate of £1 for every £100 of your holding, payable within fourteen days of the receipt of your notification. The Blue Form marked B at the top is the form on which to notify your assent.
§ The lower rate of interest payable in June of next year and afterwards (though it is compensated to some extent by the cash bonus payable at once), will undoubtedly bear hardly upon some holders whose income comes chiefly from the Loan. But the change was inevitable. No one can reasonably expect to continue to enjoy the right to 5 per cent. interest when the national credit justifies a much lower rate and the country is strong enough to overcome any difficulties attendant on a conversion operation. If holders are called upon to make a sacrifice, they will be quick to recognise that there is no section of the community from which sacrifices have not been asked in this time of trouble—sacrifices which are being resolutely borne.
§ Moreover, what is clearly requisite in the interest of our country cannot in the long run prove injurious to interests of the holders. The successful conversion of the War Loan will not merely make a great saving in State expenditure—the loan is so vast that this saving will be in the region of £30,000,000 a year—but it will pave the way for lower interest rates and enable industry more easily to obtain capital with which to employ more people and produce more goods as our trade conditions improve.
§ Accordingly I confidently make my appeal to all British holders, primarily to those in this country who form the majority, but not forgetting also those who dwell across the seas and whose patriotism bums none the less brightly on that account.
585§ In undertaking this conversion—the largest operation of the kind ever undertaken in this or any other country—the Government are carrying out what they conceive to be their duty to the State with due regard to the interests of holders. The terms which are offered have been fixed as fair and equitable both to holders and to the country in the light of the rapid fall in interest rates now in progress and of the conditions that are everywhere tending to enhance the value of British Government securities.
§ I ask you, then, in your own interest (in order to secure the cash bonus), but much more because it is going to help the country, to notify your assent without delay.
§ Your response, made swiftly and gladly, will help once more to show the world the unshakeable determination of this great nation to fight its way through its troubles and thereby to encourage and inspire others to emulate its example.
§ I have the honour to be,
§ Sir or Madam,
§ Your obedient Servant,
§ (Sgd.) N. CHAMBERLAIN.
-
cc585-7
- ANNOUNCEMENT TO HOLDERS OF £5 PER CENT. WAR LOAN. 1929–1947 1,127 words cc587-8
- EXPLANATORY NOTE 172 words cc588-9
- WHAT YOU SHOULD DO IF YOU WISH TO CONTINUE YOUR HOLDING AND EARN THE CASH BONUS 493 words c589
- WHAT YOU SHOULD DO IF YOU WISH TO APPLY FOR REDEMPTION 365 words