FINANCE SCHEME.

Auckland Star, Volume LXV, Issue 106, 7 May 1934, Page 8

FINANCE SCHEME.

MUNICIPAL CREDIT. NOTE-ISSUE AGAINST RATES. PROPOSAL FOR CONFERENCE. ! ' Proposals, one of which advocates the irJsue of redeemable municipal credit notes, will be placed before a conference , representative of all sections of the: community at the Town Hall on Wednesday. The conference will be presided over by the Mayor, Mr. G. W. Hutchison. The proposals are the outcome of deliberations by a committee set up at .a conference willed by the New Zealand Farmers' Union in November last, at the request of the New Zealand Farmers' Union. The Mayor subsequently called another conference and appointed a committee to endeavour to find aome solution to the unemployment problem, and among the suggestions put forth was one that municipal bodies should issue their own credit against incoming rates. The conference, after deliberating for some months, finally appointed Mr. T. Bloodworth and Colonel .S. J. E. Closey a subcommittee to consider the monetary proposal and report to the fill! committee.. This report is now ready and will be submitted to the conference to be field on Thursday, The report comprises eight recommendations, the chief of which is that the City Council should issue credit notes* up to 25 per cent of the estimated revenue from rates, which would amount to something like £250,000. Under the Reserve Bank Act no money which can bti accepted as legal tender can he issued except by the bank, and therefore if n municipal body decided to issue credit notes they would not be legal tender, although there would be nothing to prevent any business man or shopkeeper accepting them in return for goods or services. The scheme which the proposal involves and which the sub-committee is asking the conference to adopt is very simple and really means that inateu 1 of, say, the City Council borrowing thousands of pounds at interest in ordsr to carry out big undertakings, the council would issue its own credit notes against revenue from rates, and tints obtain the money free of interest. To put the proposal in simple form, supposing the City Council wanted drainage work done, and it was estimated to cost £20.000. Tenders would be called and a tender accepted for, say, £20,000. The contractor would Rtart the job, and progress payments would be made to him from time to time by the City Council, which would pay him in municipal credit notes. They might be for £50, £10, £5, £1 and 10/ notes. Whether it would bo legal for the contractor to pay his employees with these notes is doubtful, but he could retain the municipal and pay his workmen in banknotes. ff» that were done the contractor would br; left with the municipal credit notes. He could then get in touch with ratepayer* of substantial amounts to the council, and exchange the credit notes for bank notes. The ratepayer would then pay to the council the credit notes in settlement of rates.