LOAN PROBLEM

New Zealand Herald, Volume LXXV, Issue 22949, 29 January 1938, Page 15

LOAN PROBLEM

LOCAL AUTHORITIES LEVEL OF INTEREST RATE INVESTORS NOT ATTRACTED MONEY GOING TO AUSTRALIA [by TELEGRAFH —OWN correspondent] GISBORNE, Friday "Tho Government cannot be unaware of tho situation, for the Minister of Finance, Mr. Nash, has,had representations on the subject from scores of local bodies throughout the Dominion, who are trying to borrow money without success," said Mr. F. 11. Hall, chairman of the Poverty Bay Klectrie-power Board, at a meeting today. The board was discussing a recommendation from'the finance committee that the board should take steps to raise £IO,OOO in addition to an amount of £25,000 already authorised for line extension work.

The managing secretary, Mr. R. P. Baigent, mentioned that the board's efforts to secure the £25,000 had dragged on for so long that it seemed only prudent to start now to seek additional money which undoubtedly the board would need eventually.

"Why is it so difficult for local bodies to raise loan money at 3J per cent when some other channels of investment usually patronised by investors have become loss attractive?" asked Mr. S. H. Phillips. "One would think that local body debentures would be sought, in the present position of certain industrial investments."

The chairman commented that a great (leal of money was being taken up by the Government. "There are Government securities in tho market that will pay £3 15s per cent, including redemption. That may be one reason why we cannot get loan money at 3i per cent," remarked the managing secretary, who stated that he had bought Government securities yielding £3 15s for sinking fund purposes.

"It is common knowledge that a good deal of New Zealand monev is going to Australia," said Mr. T. T. Corson, who mentioned that Australian Government loans were available at 4 per cent. Members of the board generally were of opinion that the Government would have to recognise the difficulties of local authorities, many of which were held up in their programmes of work by lack of loan monev.