LOANS AND LONDON MARKET

Auckland Star, Volume LIII, Issue 86, 11 April 1922, Page 4

LOANS AND LONDON MARKET

AUCKLAND'S FORTUNATE VENTURES. FIRST ENGLISH LOAN SINCE 1014. WITH AND WITHOUT WARAXTEE. The statement by the Prime Minister that the Government cannot in future undertake -to raise money for local bodies or guarantee their loans m London, included the interesting remark that the Auckland City Council, after failing to obtain the guarantee of the j State for its loan, had done very well without it. The noteworthy fact that tne Auckland City Council was the first local authority to obtain a .State guarantee for a loan was mentioned this morning by the Mayor, Mr. J. H. Gunj son, in discussing the matter of loan raising. "The Auckland City Council was the first local authority to obtain a State ; guarantee on the London market for ! a loan issue. This wae secured in March I laist in connection with the electricity loan of £o00,000,'" said Mr. Gunson. "When the State guaranteed the backing," he added,. "the loan was underwritten and subsequently oversubscribed at <>4 per cent;, par. It will be recollected that this was the first loan either of Dominion or other colortiai governenta or of any local body outride England raised in London since 1914, and it broke down what had been accepted as .a settled condition of the money market —that there would be no loans available for the overseas interests of the Empire. The loan at that time was got off on exceedingly favourable terms, and enabled the corporation to push on with its contracts 'for machinery and electricity development, and at the same time, although the rate was high, it had a very valuable effect on the financed of the city generally, to cay nothing of the Dominion. Subsequently the council asked the Government for a guarantee for its further £500,000 loan under the 1921 City Empowering Ast, but Mr. Massey intimated that the Government could give no further guarantees to local bodies, and this statement has been .confirmed by the Prime Minister's intimation to the representatives of the power boards last week. The council later, on its own tive and through its own financial agencies, floated £400,000 of this loan in London. This included amounts for the J Auckland Drainage Board and the One Tree Hill Road Board. This loan was oversubscribed at 6 per cent., interest Jat 94. Since then, as everybody known, the money market has again been easier, /but it -was necessary for the cpuncil to act at that time, otherwise it would have had to close down its street and some other important tvorks, as the council was resolved not to draw on overdrafts. The council has set its face in recent years against the expenditure of money unless it is available from ordinary revenue or otherwise satisfactorily secured. While during the last few months the money market has eased considerably, and many think that it will ease further, yet with the very unsettled conditions in Europe, the Irish position still in an unsatisfactory state, and trade conditions at Home uncertain, it is impossible to 6ay what the future holds. Therefore if the best possible is done at the time, money that is wisely and judiciously spent on permanent "works and administration cannot go very far wrong."