LOCAL BODIES' LOANS.

New Zealand Herald, Volume LV, Issue 16823, 13 April 1918, Page 9

LOCAL BODIES' LOANS.

♦ WAR TIME MORATORIUM. Referring yesterday to the financial legislation now before Parliament the Mayor, Mr. J. H. Gunson, said the provision for making loans to local bodies subject to the moratorium was a very necessary measure. It was an extension of the principle under which the moratorium was originally enacted. It was satisfactory to note that not only was protection afforded against the calling up of the principal, but that the rate of interest could not be increased. This would inflict no hardship on bondholders in the conditions now obtaining. " It appears to me," said Mr. Gunson, " that, speaking generally, the time has arrived for the Government to limit the rate of interest. While under ordinary conditions there might be objections to this course with a plentifully supplied I money market the competitive element j alone is sufficient to ensure reasonable rates of interest—wo have now reached a stage when legislative protection must bo afforded against exploitation." Dealing with the position of the City Council in regard to the moratorium the Mayor said there were no loans immediately maturing. The first loans to mature were issues of 1900, which would fall due in 1921, and thereafter there were loans maturing in successive years for two decades. The first of the loans to mature were not for large amounts, less than £100,000 covering the total. He said that no doubt in connection with loans provided with sinking funds, where such funds were substantial, or sufficient to extinguish the loans, the course prescribed by law would still bo followed, viz., the utilisation of tho sinking funds for the purpose of redeeming the bonds. Evidently the proposed legislation was designed to afford relief to local bodies against any arbitrary or harsh treatment in respect to loans maturing for which there were no sinking funds, or inadequate sinking funds, provided. It was obviously undesirable that local bodies so placed should be forced on to the market under existing conditions.