FEASIBILITY OF UNITED FINANCE

Manawatu Times, Volume LIII, Issue 6757, 9 November 1928, Page 6

FEASIBILITY OF UNITED FINANCE

Shown by Mr Loughnan ANSWER TO CRITICS OF PROPOSED LOAN margin amply sufficient. There was a large attendance at the Kelvin Grove sehoolhouse last evening to hear Mr. C. A. Loughnan expound the policy of the United Party. The candidate, in his address, replied to criticism of the proposed £60,000,000 loan, showing from the records of the Advances to Settlors office, that it was perfectly conclusive that the margin of one-quarter per cent, was amply sufficient to make both ends meet, on the following footing. The Advances to settlers branch showed for the year ending March 31, 3927, a gross profit of £94,494. The overhead, management and general expenses of the office were £30,426, which was at the rate, of 2s lid per £IOO of capital employed. Realisation losses, writings down in respect of doubtful securities, office buildings and equipment amounted to £15,221, thus leaving a net profit for the year of £48,787. The workers * advances branch, which was a quite recent institution, showed a net profit for the same year of £14,000, after providing fojr all its management and overhead charges, which amounted to only Is 5d per £3OO. Electors should note the great redaction in the cost of management from the work being done in the offices already in existence. It was pointed out, however, that during the year under review, the margin of interest was one-half per cent, in favour of the Government as against one-quarter per cent, under Sir Joseph Ward’s scheme on the money invested. Taking the money invested in the Advances to Settlers branch alone at £16,000,000 in round figures, one-quarter ■ per cent, amounted to £40,000, thus leaving a margin of £8787 against loss. Sir Joseph Ward’s scheme aimed at only making both ends meet, but the above figures • showed that it could be carried out and actually show a profit per annum of nearly £9OOO. The. new branch, however, would only have to meet the overhead charges at Is 3d,'lnstead of 2s lid, on the same footing of difference as the Sear Book showed to exist between the old advances branch and the new advances to workers’ branch. •

•Mr. Nash, in Ms last speech, had said there was an inevitable loss on the discount of the loan of £3,500,000. He entirely overlooked the extraordinary, rapidity of the accumulations of sinking fund. On this point Mr. Longhr.an gave the following illustration. The Wellington Harbour Board, in Its last statement of accounts in schedule E, gave the accumulations of sinking fund resulting from one of its loans as £384,177. This was a loan of £850,000, with a sinking fund of opehalf per' cent. Mr. Loughnan, on the authority -of Mr. Maurice Cohen, stated that when the latter gentleman joined the Harbour Board in 3907, the accumulations of this fund amounted to only £84,000 or thereabouts. Since then, the actual sinking fund accretions over 20 years" had amounted to only £SS;QOO, so that to bring up the total to its present level, meant an accretion resulting from investment of no less than £215,177. This provided a complete answer not only to Mr. MaeAlistcr’s’ challenge as well" as to Mr. Nash J s criticism. The latter was either entirely ignorant of the Tear Book figures and the principles which governed the accumulations of compound interest and principal, or else, he was trying to get away with a piece of purely political “clap-trap,” Mr. Loughnan also dealt with the general financial position of the Government and particularly in regard to the proposed £.10,000,000 expenditure for the completion of existing railways in which £7,000,000 of money was locked up unproductively. He showed from the Public Works statement and the Railway 'statement presented to Parliament that the Government stood committed to an expenditure on new railways, deviations and other railway extravagances amounting to no less a sum than £28,018,367, details of which he gave with precision, claiming that the £10,000,000 loan being in substitution as far as possible for the above commitments, was in fact, a huge economy. . A unanimous vote of thanks and confidence was passed.