New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-01-12
BOnar Law Aims at In
vestOrS Who Seek
High Interest
OUTLINES BASIS
OF LOAN IN SPEECH
Rate for Future Issues
Will Not Be Increased.
He Declares

London, Jan. 11.-Andrew Bonar Law,
Chancellor Of the Exchequer. in an
nouncing the new war loan at the Guild
Hall to-day at one point in his speech
aimed his words at investors who might
be tempted to withhold their money
for possible later issues at higher
rate of interest.
"As far as the present government
can control the future" he said, "a
higher ratio Of interest will not be paid
at any time. As long as there is money
in the country we will not allow lack
Of it TO hamper the conduct of the war.
There is a limit to the rate of interest
the government will pay for money. II
this loan should fail-but it will not
there are other methods which can be
applied, and the rate of interest in such
case will not be 5h per cent"
Sees Goal in Supreme Effort
Mr.. Law said that the basis for the
loan would be an issue at per cent
and the price e5. The period OF the
loan. ne stated, was thirty years, with
an option for redemption in twelve
years. He added:
"Shall it ever be said of this country
that it is willing to give its sons but
not it's money? One supreme effort
now and the goal will be reached.
THE military position does not rep
resent the true position OF the war, for
the great German military machine is
resting on an internal foundation which
is crumblng irresistibly before our
eyes"
The Chancellor said per cent would
be paid on application and the balance
in equal proportions. The last payment
would be on May 30.
The government, he added, was CIV
ing an option of tax free loan at
the rate of 4 per cent, issued at par,
TO be redeemsble at the option of the
state at the end Of twelve years.
Foreign holders of the stock, he
announced, would not be liable TO the
income tax.
Investment in the loan would be
on better terms than would be offered
in the future Mr.. Law said. There
was a limit 70 the rate of interest the
government would pay for money, but
SO far as he could forecast the future
a higher rate of interest than the
present would not be paid
Mr.. Law outlined the terms OF tne
new war loan approximately as had
been forecast The bulk Of the issue
will be 5 per cent bonds sold at 70
thus Welding approximately 5h per
cent. There will also be per cent
bonds free of income tax, TO be SOLO
at par. The per cents will be issued
for a period OF thirty years. with the
option OF redemption after tWsive
years. The As will run for twenty
five years, with the. same option.
eve are giving the option TO those
who prefer security to anything else, u
said Mr.. Law, "of having tax com
nounded loan That loan will be at
the rate of 4 per cent II Will be
issued at par and redeemable at the
option OF the state at the end OF twelve
Years. but enduring for twenty-five
years.
"Well. gentlemen. every one knows
that from the viewpoint Of financial
security il is not good thing for the
Chancellor of the Exchequer TO give
away the right Of taxation IN the
future. But | do think that If there is
snv one wanting to be quite sure that
during the period of the loan he VIII
not have TO pay higher income tax
than five shillings, we ought TO give
him that option il it is desired"
Previous Loan Convertible
Five per cent Of the subscriptions
must be paid with the application and
tho remainder will be payable in equal
instalments before May 80. The previ-
ous war loan may be converted into
the new loan at par. similar pro-
vision is made for conversion of vari-
Gus types of short-term paper issued
in the last few months.
The sinking fund provision outlined
by Mr.. Law WAS the most striking
innovation in connection with the new
loan. This il the first time that
British loan has been issued with
sinking fund provision.
The government agrees to set aside
monthly one-eighth of ] per cent OF
the total amount of issue. This sum,
representing an annual sinking fund
appropriation Of ! Z per cent, VIII be
allowed 10 accumulate until fund
Of 100000 is in hand, which Will
then be used for purchasing bonds IN
the open market whenever they fsll
below the issue price.
The bonds will be issued in demon
nations of $50 and multiples thereof,
while through the postofhce subscrlp-
tions as low as IS will be received.
Reginald McKenna, former Chancel-
lor Of the Exchequer, wound up the
meeting, supporting the appeal made in
behalf Of the loan and urging the
favorable effect that a huge subscrip'