PUBLIC TRUST

Hokitika Guardian, 2 October 1929, Page 3

PUBLIC TRUST

THE ANNUAL REPORT.

RAPID GROWTH OF BUSINESS

The enormous volume of funds now controlled by the Public Trust Office is set forth in the .annual report presented to Parliament by the Minister in charge. Sir Joseph Ward:— “The new business reported for the Vear constitutes a further record for the Office,” states tlie Minister. “During the period under review 3508 now estates and funds of a total value of £7,091,350 were accepted for administration, as compared with 3526 of a total value of £6,511,928 accepted during the preceding year. This is the first occasion upon which the now business for any one year has exceeded £7,000,000. The value of estates and funds under administration on March 31st, 1928, was £44,155,548, whilst the corresponding figure on March 3lst, 1929, was £48,334,790—an increase of £4,179,242 during the year. The average annual increase in the total value of estates and funds under administration for the past eight years has been over £3,000,000, but this is the first time on which the increase has exceeded £4,000,(709. The following table shows the growth of the business conducted liy the Public Trust Office over the last twenty-five years:— ■ ...

“The figures for the nqw business accepted during the past six years, arc impressive, and are as follows:

. , £32,208,768 “which approximately equals, the total value of estates and funds under administration five years ago—i.e., as at March 31st, 1924—when the value stood at £32,404,724.”

The report replies to the demand very often made, that the Public Trustee should lend the funds available in the office at lower rates of interest: —

“In view of what is considered bv many as an easing tendency in the current rate of interest on'mortgages, it lias been urged on more than one occasion that a reduction should be made iu the rate charged by the Public Trustee on loans made by him. In the closing months' ( of the past vear representations reached me to the effect that the Public Trustee should, bo required to reduce the rate of interest charged to applicants for loans from the Common Fund of the Office. As considerable misconception prevails on this point, (f- is dpsirable that the special position which the Public Trustee occupies, so far as the investment of funds is concerned, should be made clear.

“The. funds available to the Public Trustee- are not Government moneys, but represent assets in estates which are .entrusted to him for administration. Roth in the administration of estates and in the investment of monevs derived from those estates the obligations of the Public Trustee correspond with those of a private trustee, and include the duty of seeing;- that the maximum rate of interest is obtained, consistent with the security of the trust funds. Testators who have entrusted the administration of their estates to the Public Trustee, rightly expect him to safeguard the interests of their dependents by securing to them the fullest income their estates can earn, consistent with the security of the funds invested. Thus fit is the duty of the.. Public Trustee to invest the funds at the highest current rate obtainable on first-class trustee securities, and the amount so derived, after a small deduction made to rover the cost of working expenses, and the provision, of the necessary reserves, is made -available to the beneficiaries who are entitled to it.

“It will thus bo seen that the principles by which the Public Trustee must be guided in the investment of funds are three in number—(l) The general economic conditions prevailing from time to time and the extent to which there is a demand for money on mortgage. (2) The special statute law under which the Public Trust Office is established, and >' which the Public Trustee is bound. (31 The general law governing the rights and duties of trustees. “There is no doubt that a lowering of the rate of interest on loans by the Public Trustee,. in order to make cheaper money available to borrowers, would be a grave breach of trust, and if nnv grounds existed for thq, belief that the funds invested by the.- Public Trust Office were not being invested at the current rate obtainable on good trustee securities confidence in the Office would be shaken. A reduction in the present rate charged to borrowers would be followed by a reduction in the income of those persons whose interests the Public Trustee is bound to safeguard, many of them women and young children 1 ’ already inadequately provided for and dependent for their living on the income derived from the funds held by the Public Trustee on their behalf. Any reduction in the rate charged by

the Public Trustee must, therefore, follow, and not precede any general fall in interest rates in the opipn market.”, : "

The Public Trustee . explains also why a reduced rate of interest is parable in resnect of moneys held in the Common Fund of the Office:

“With the advantages which the Common / Fund affords, the rate of Interest must necessarily be lower than that obtainable from the investment of the pooled moneys in /swcoirllly selected .sron i *ties at the highest rates. When, however, it is recalled that interest is being allowed at the present time at the rate of 5} per cent per annum, notwithstanding the decline in the rate of interest obtainable on first-class investments, it will be admitted that, this is an excellent return and the highest compatible with security of the moneys invested.' This return is free from all charges, and, moreover, it must be remembered that even with the most conservative selection of securities there is .a possibility of loss, from which risit' investment in the Common Fund is entirely free.”

Value of Estates and Funds under Administration. Year. ino4 .. ... ... 3,152,882 in()'9 ... 6,399,567 1914 12,282,883 1919 ... .A 19,242IJ347 1924 ;• 32,404,724 1929 48,334,790

Tear ended Business jXTnr. 31st. £ 1924 3,781,155 1925 ....... 4,621,869 192G 4,651,447 +. 1927 5,551,0191928 6,511,928 1929 7,091,350