FINANCE AND INVESTMENT "THE SPECTATOR" CROSSWORD No. 47
By CUSTOS
IT is now becoming apparent that the Treasury riot only holds the trump cards in the gilt-edged market but knows when and how to play them. Here was £350,000,000 of 4-4 per cent. Conversion Loan overhanging the market and im- posing a powerful restraint on rising prices so long as the Government's plans were not known. With a wave of its wand Whitehall announces replacement by a 2 per cent. short-dated bond and, hey presto, the whole atmosphere is electrified. This is the new technique boldly applied-no cash subscriptions to the 2 per cent. loan are invited-and it has commanded a remarkable success. Buyers have rushed into both the long-dated and short-dated stocks on the per- fectly reasonable assumption that the Treasury is determined to get prices higher, investment holders of the maturing 4 per cent. loan have been suddenly confronted with quite a pretty re-investment problem, and conditions are now reminiscent of those at the time" of the great War Loan conversion of 1932.
War Loan is well within sight of par, and I shall be sur- prised if that level is not reached and passed in the near future, provided, of course, there is no really serious adverse political news. That would still leave the Treasury tech- nically in possession of the field, but would rob the authorities of the atmosphere in which technical advantages can be successfully pressed home. For the present the tide is flowing strongly, and there is something approaching a scramble for trustee stocks and other securities of genuine investment calibre. My advice to holders of fixed interest stocks to ignore the whisperings of inflation and see things through is receiving ample justification in the course of events. It still holds good.
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