HARBOUR BOARD LOAN.

New Zealand Herald, Volume LVII, Issue 17648, 8 December 1920, Page 6

HARBOUR BOARD LOAN.

ISSUE AT A DISCOUNT.

AUTHORITY FROM MINISTER.

DISCUSSION BY MEMBERS.

The rate of discount at which debentures should be offered to the public in connection -with the Auckland Harbour Board's authorised loan of £1.000,000, was considered* yesterday at the ordinary meeting of the board. The chairman, y Mr. H. D. Heather, stated -that he had discussed the matter with the Prime Minister during his recent visit to the city, and Mr. Massey had subsequently written to the board explaining that under section 33 of the Finance Act, 1920, the Minister for Finance was empowered to increase the rate of interest provided for in the board's own empowering Act. It was proposed to immediately prepare, a new Order-in Council, which although it would 1 specify a rate of interest of 5g per cent., would enable the board to sell debentures at a discount. The Prime Minister said he was inclined to think that with the income tax concession recently granted, the board would have no difficulty in : disposing - of its s debentures at such 'a price as would not return to the holders more than 5| per cent. As he felt confident -the board's present borrowing would be strictly confined to urgent requirements; he was not imposing any restrictions. Mr. Heather said the City Council was in precisely the same position. He had discussed the position with the Mayor, and he had agreed that in , the circumstances it would be disastrous for the City Council andi the board to enter into competition in an endeavour to dispose of their debentures. He suggested that in the meantime the board should 'defer action pending the issue of the Order-iu-Council proposed by Mr..Massey ■'■-.■ ■' Mr. J. S. Bond asked if the Government purposed fixing the rate of discount. Mr. Heathers replied, that the Government recognised it was necessary not to impose any restrictions. The board would have to sell it* debentures at such an amount as to allow the purchasers something like 6 per cent. • Mr. A. J. Entrican said selling debentures at a discount was very unsatisfactory. The board had gone very carefully into its requirements, and if it sold debentures'at a discount it was bound to incur a loss. Other local bodies would be ;in a similar position. The present arrange- ! ment would be more satisfactory to the board and to the City Council, but other local bodies would be left in the lurch. It was agreed that the chairman should watch the course of events in regard to this matter and report to the board.