STATE ADVANCES.

Hawera Star, Volume XLVIII, 18 September 1924, Page 5

STATE ADVANCES.

STR ENGTHENING THE, FUNDS

NEW LOAN FROM BANK OF NEW ZEALAND); :

STATEMENT BY PREMIER

(BY TELEGRAPH—PRESS ASSOCIATION.V WELLINGTON, Sept. 17. ■When the House met this evening the Prime Minister made a statement on the subject of a; proposed loan from the Bank of New Zealand as a meqns of strengthening the finances of the State Advances Department. Mr. sey said : “I desire to inform hion. members that the Government lias received from the Bank of New Zealand an offer-: of; a loan amounting to £1,250,000. -By * section 4. of the 'Mortgages . and : Deposits Extension Act, 1921, the moratorium was extended to December 31,, 1924. The bank, has realised that, differentiated ais it is from other, banks.. and financial institutions in this country by the fact that the Government holds for the people of New Zealand a ' considerable proportion, of its shares, and that it must be the desire of the public as shareholders ‘that the directors should, so- far as it is consistentwith their duty, render to the Government such assistance as they justifiably can in providing money for mortgage purposes for settlers. The raising.: of money on the London niohey market has grown more expensive owing to the demand for capital, .and, even when such money is raised the Government v ia faced with heavy expenses, of exchange--in the transmission of the proceeds to New Zealand, -but it is essential, that further funds should be found for the State Advances Office if it is to render* the assistance required for the purpose mentioned and possibly, also Tor, the moratorium. ..

“In these circumstances the Bank of New • Zealand hais voluntarily intimated to the Government that it-is prepared to advance the.large sum of £1,2,50,000 at 5£ per cent per annum for a term of ten years, ' but repayable at ' qny time within thht period on giving reasonable hotice : of.. that- intention if the Government finds that it can finance more economically -iriV-some other wty. v This offer is aWsatisfactory one when, compared with; the terms upon which the Commonwealth loan of £10,000,000 is now beihg' raised within Australia. On the five-year stock of that loan the return to The : investor, including redemption, is £6 7s 2d and . oil ten-year stock the : return to the investor )is £6 4s per cent, while the,. Commonwealth has to' bear :ih addition ■to these rates all the expenses of flota-; tion The loan of £1,250,000 offered by the Bank of New Zealand at the! rate of £5 os per cent, wiil irivblvW the Government of this country in the. payment of no flotation expenses whatever. ' -' • ••' ■

“To enable the hank to carry out its ' offer it is intended that ;it should issue' further capital under section 12 of the Bank of New Zealand. Act, 1920. The wa " s authorised, with the consent ot the Minister ■ for Finance,' to raise new capital to the extent of £2,250,000 and this authority has been ex-. hausted with the exception of £l ,250,00, which it still has authority to issue with the Minister’s consent, and ' this consent I have given. It is pro?°oca iss i Ue this remai ning capital bv 1.250,000 shares at £1 each. Of these shares one-third will be issued to and taken up by the Government in .the terms of the Act and will rank as. ference B_ shares. The remaining two-' thirds will be offered to other shareholders as ordinary shares. “It is a source of satisfaction that in. a comparatively small country like New Zealand the Government should be able to raise a large sum of money with the assistance of a local institution oh r terms such as I have indicated. .. The - procuring of the money in New Zealand ‘ means a saving of two per cent, on the fLo ®™ ount * a® compared "with what the cost would have been had it been fF r * V i tf> i the £1 ,250,000 riom England to this country. At the present rates the saving would he £2T r

Li further explanation of the-pro'-to°S Massey said this loan wmild take the place of his recent proposal to furnish the State Advances- Denart month Wlfc A ®r ner r Kfl.^ PPh , C ? 10nB - h - a<r Wll balling oft of late and he anticipated that thi« money would be .sufficient