"Cheap Money!"

In what wistful British investors remember as "the dear-money war" of 1914-18 you could rent your patriotic funds to King & country for as much as 5%. A daring pilot in the Royal Air Force in those days was Major Sir John Allsebrook Simon, who then sported a thick mop of hair. Last week, now bald as an egg, Sir John Simon rose in the House of Commons as Chancellor of the Exchequer again to do his bit for King & country, this time by trying to make World War II definitely "a cheap-money war" so far as Great Britain is concerned.

In recent months Sir John has moved adroitly to compel British investors to lend to the Exchequer eagerly and cheaply. Restrictions were imposed against new private and municipal bond issues, thus leaving the British bond buyer hungry. Last month His Majesty's Government requisitioned a list of 60 gilt-edged U. S. securities held by residents of the United Kingdom (TIME, March 4). Last week the Britons from whom these dollar securities were taken received first payment for them from the Treasury in pounds. They no sooner had these pounds in hand than Sir John popped up in the House the very next day to announce the first British long-term loan of World War II, an issue of -L-300,000,000 ($1,200,000.000) offered at 3%.

To be issued at par March 12, the bonds are redeemable at par Oct. 15, 1959, with a Treasury option to call them for redemption any time after Oct. 15, 1955. The Chancellor is so sure the whole issue will be snapped up at once that he told the House his Treasury books will be open for subscriptions for only 24 hours, and no one person will be permitted to buy more than -L-1,000 ($4,000) worth.

Sir John was asked in the House of Commons whether he could guarantee that the Government would not later resort to a forced loan or capital levy. Replied he: "I cannot give any final undertaking as to how the war will be financed throughout the duration." The other ways the Government has been meeting the war's -L-5,479,452 ($21,917,808)-a-day cost is through National Savings Certificates and short-term Defense Bonds, which have been selling merrily in the Kingdom to the tune of almost -L-1,000,000 ($4,000,000) per day. Still under debate inside and outside the Government is the plan of Economist John Maynard Keynes to appropriate a fraction of all wages, "save" them for the wage earners until after the war.

This file is automatically generated by a robot program, so reader's discretion is required.