LOCAL BODY LOANS

Otago Daily Times, Issue 22022, 3 August 1933, Page 10

LOCAL BODY LOANS

INSTALMENTS OF INTEREST' DEVELOPMENTS IN LONDON GOVERNMENT ADVISES PAVEMENT IN FULL Advice to pay interest in Loudon in accordance with validating legislation promised by the Government is contained in a telegram which the City Council recently received from the Acting Prime Minister (Mr J. G. Coates). The legislation which the Government has undertaken to pass will validate payments m London in sterling, and will also exempt from the statutory, 20 per cent, reduction optional domiciled securities sold m London not later than July 1 last. A similar notification has been received by the Otago Harbour Board.

DISCUSSION BY CITY COUNCIL Strong objection to the action of the Finance Committee in not announcing the receipt of the telegram was expressed by Cr Silverstone, a member of the committee, at the meeting of the City Council last night. . Cr Silverstone said that at the last meeting of the Finance Committee a most important telegram from the Acting Prime Minister had been considered, it dealt .with matters affecting loan policy and interest pavments by local bodies. Cr Allen rose to a point of order. Lr Silverstone should not divulge the contents of the telegram to the council, he said. The telegram affected the loans of the Drainage Board, and not those ot the City Corporation. .... Cr Silverstone: The telegram did not refer to the Drainage Board. Cr Allen again rose to a point of order claiming that Cr Silverstone was not entitled to raise the matter before it was brought before the council. The telegram, he ,said, referred to loans falling due in London. _ _ , „ The Mayor (the’Rev. E. T. Cox): Cr Silverstone is in order if he asks why the matter has not come up. “The telegram should have been mentioned in flie report,” Cr Silverstone added. It was not marked confidential, and had been before every local body in the Dominion. There was a suggestion that it contained something that the public should not know. If the Acting Prime Minister tells us that pur loans have been removed from the London Stock Exchange list and that other local body loans are affected, why is the public not allowed to know?” he asked. We are not to blame for what the London btock Exchange does. Why hide it? He claimed that the London Stock Exchange was trying to dictate the policy of the Dominion, and wa 9 trying to compel the Government to accept its terms. Cr Allen (to the Mayor): -I am surprised that you allow this to go on. Cr Jones: You don t like it. , . Cr Allen: You don't know anything about it. 1 You don’t know, anything about parliamentary, procedure judging by your questions to-night. A .- Cr Silverstone said that the Acting Prime Minister knew exactly what he was doing. He was surprised and pained that the matter had been ’’kept secret. The people ought to know where the power Cr Allen, in reply, said that he thought that a member of the Finance Committee who knew all about the telegram would have kept silence. Cr Silverstone did not seem to care a scrap whether he. injured the credit of 'the council. The information would have been divulged when the time was opportune. Councillors should show some discretion. ■ Cr Allen added that some councillors wanted to spend, spend, spend. They did not seem to care where the money came from. It must come from rates because the rest, of the revenue was earmarked. Cr Jones: The Acting Prime Minister asks you to spend. He asks us to pay in sterling. , .. , Cr Allen: Is paying in sterling spending? Cr Jones: You will find out. Cr Allen added that the matter would come before the Drainage Board. Or Silverstone knew that, but he got up and talked to the public. He was in the habit of talking to the public. TEXT OF THE TELEGRAM The telegram which the council received from the Acting Prime Minister is as follows: . “The Government is advised, that all loans of your council and several other local authorities have been; removed from the London Stock Exchange lists owing owing either to payment of interest in New Zealand currency or deduction of 20 per cent, under the recent legislation. The Government cannot but view with alarm the serious effect on local bodies credit and, in fact, on New Zealand generally in the London market. The Government has announced both in New Zealand and London, first, that legislation will be introduced to validate payments in London in sterling in respect of loans raised in London pursuant to the London prospectus and will also validate payments in sterling where the past practice has indicated the right of the holder to be paid in sterling and the intention of the local body to - pay in sterling; secondly, that amending legislation will' be introduced to exempt from the recent 20 per cent, reduction all optional domiciled securities sold in London not later than July 1, 1933. I strongly urge that your council issue instructions to its London agents Ho pay interest or repay the principal in connection with your loans in accordance with the promised legislation. Any other course must prove disastrous to any hope of successful renewals or conversions of any local body or Government securities. I would appreciate urgent telegraphic advice of your final decision in order that J may communicate with London.” HARBOUR BOARD DEBENTURES INTEREST PAYMENT IN FULL (United Press Association.) (By Electric Telegraph—Copyright.), LONDON, August 2. (Received Ang. 2, at 11 p.m.) Financial writers give prominence, without comment,' to the Bank of New Zealand’s announcement that payment of interest on the Otago Harbour Board’s debentures will be made in full. The position in rebpcct to this matter was' explained to a. Daily Times reporter last night by the chairman of the board (Mr H. C. Campbell), who stated that when the Otago Harbour Board paid the interest instalment due on the debentures on July 1, the board, acting in terms of the interest reduction legislation of last session, deducted 20 per cent, from the amount. Recently a communication was received from the Acting Prime Minister (Mr J. G. Coates) authorising payment of the full amount, and an intimation to'this effect was cabled to the Bank of New Zealand in Loudon. Since all payments by the board in respect to the debentures are made in sterling, the effect of this is that debenture-holders will now receive the full amount.