LOCAL BODIES' LOANS

Evening Post, Volume C, Issue 38, 13 August 1920, Page 4

LOCAL BODIES' LOANS

UNWISE COMPETITION

More than once in the House of Representatives comments have been made about the activities in the money markets of local'bodies. Yesterday the Hon. J. A. Hanan again brought up the matter, and asked the Prime Minister if something could not be done in the direction of the Government providing money at a uniform rate of interest. At present, he said, the local bodies were competing with one another, and thereby affecting the money market disadvantageously to themselves.

Th« Prime Minister said that already the Government had lent a. large sum of money to the local bodies, but they could not provide one-fifth of what was required. There was not a local body at present that was not Taiaing money for public works of some description. There was no question that they were coming into competition with one another. Personally he thought they were going too far, and were acting unwiselj, because, with the shortage of labour and material, they, were not getting the full value of their money. He thought tt would be very much better to wait quietly until both labour and material became more plentiful. The Government was doing all it could: to keep down the rate of interest, and but for their action the rate would be up to 8 per cent. Referring to the same matter later, in reply to a question by Mr. Veitch, the Prime Minister said that the Government, after full and mature consideration, had decided that local bodies should not borrow at a rate that would give the lender more than five and a ■half per cent. If they continued competing, they would have moneyup to an extreme rate. In England established firms who wished to extend their business Were obtaining the money at 8 to 10 per cent. If that happened in England it was bound to have an effect here. Fortunately, there was sufficient money in New Zealand for the country's re- / quirements. But he did not know whether they would be able to keep it here.