LOAN MONEY LACKING

New Zealand Herald, Volume LXXV, Issue 22971, 24 February 1938, Page 12

LOAN MONEY LACKING

Though far from being an isolated instance", the vain search by the Mount Albert Borough Council for loan money on the terms officially imposed, is a striking example of the difficulty local bodies are facing when they seek to borrow. The council can claim to have done everything in its power to raise the money it needs for capital works. It has tried from one end of New Zealand to the other, and has been utterly unable to persuade anyone to lend at 3i per cent. Offers to make the loan repayable m 15 and in 10 years were of no avail.. Every other possible source of funds having been tried, the council now has an application before the State Advances Corporation, and is waiting a reply. If it should be unfavourable, or even long delayed, some 80 men may find themselves without employment. The situation has not arisen because of ill-will on anybody's part. The council itself, as proved by the tone of its discussion, is only too anxious to proceed with the works affected, and to keep the men on its payroll. Those who have declined to lend the money are not boycotting the Mount Albert Borough Council. Many other local bodies are in the same plight. The fact is that money at 3l per cent for 20 years, or even for appreciably shorter terms, is not offering for local body securities. A glance at stock exchange sales and quotations shows why. Government stocks, except those •with redemption dates very near at hand, are yielding more than 3.1 per cent. Local authorities are not usually able to borrow so cheaply as the State can. The plain fact is that interest has moved upward since the present limit was placed on what local bodies may pay. The authorities may be reluctant to recognise the movement, but will not much longer be able to close their eyes to plain facts.