HARBOR BOARD FUNDS.

Poverty Bay Herald, Volume XXXI, Issue 10038, 3 May 1904, Page 2

HARBOR BOARD FUNDS.

TO PUBLIC TRUSTEE. Tlie following reply was sent to tlie Public Trustee, m regard to his 'letter dealing with Harbor Board funds, adopted at the meeting of tho Harbor Board this afternoon: — "Tlie Public Trustee, Wellington. — Sir : Your letter of tlie 19th inst. has been considei _d by my Board, and I am instructed to reply as follows:-— "Ist. As to position of harbor loan funds : I send you enclosed memorandum or summary showing the position for tlie years 1894 to 1903, from which the following results come out:, (a) Tliat down to 1900 the several funds were fully invested, or almost so, on. mortgage of real property at interest rates varying from 6£ or 6 per cent, to 4$ per cent, j (b) that since then the funds invested on such securities have steadily ceased to be invested, until .m 1903 amounts aggregating £86,502 have been placed m the Common Fund of the Public Trust Office at -3* per cent. These are startling facts, m the face of the express provisions of the Acts 1894 and downwards to the present time, Avhich direct the funds of this Board to be invested primarily on the security of real property. The Act of 1894 (section 4) directs tliat all securities paying less tlian 6 per cent, interest -shall be relieved, and the proceeds invested on the security of real property mortgages. "You say 'for about 5 years past, as your Board must know, the office has been lending its money at 4£ per cent., tliat being the market rate for loan on mortgage. Interest had to be paid regularly j to those interested, and it is the obvious duty of anyone m the position of Public Trustee not to lmve any large sum uninvested. Tlie letter, which your Board lias misread, referred to the balancesheet and accounts for List year. Surely your Board do not think a sum of -89,000 out of a trust of £101,000 would remain uninvested for so many months, the office m the meantime allowing 3_ per cent, thereon?' If the facts are as stated m this quotation, one would conclude that it was the 'obvious duty' of the Public Trustee to account to my Board for 4£ per cent, interest, and not 3£ per cent., or to show cause why the Board's fundare not invested at market rates on mortgage. How . 4s the Common Fund invested? . "Your letter of the 19th February says : 'Pursuant to section A of your Amendment Act of lost year (that is 1903), I beg to give you notice tliat T hold at office rates the following sums (m all £89,502). . If the moneys were not available, why was the Board asked to recommend applications for loans? ' "2nd. As to investment of funds : My Board feels that a controversy, with you as to its funds and the administration thereof is not likely to tend to any result satisfactory to it, because your Board lias (or, at least, claims to have) the power and right to choose or to reject securities offered, no matter what my Board may consider safe and best, unless indeed my Board, by some proper action m Court can compel better performance on your part. It is just a question of whether you will listen to the recommendations of my Board or ignore them. The .latter appears to be the intention, because you have, by anticipation, repudiated all but one of the applications recommended, and that without obtaining 'a valuation . to be approved of by the Public Trust Board'— that is to say, a special valuation made to date, and you insist that my Board, m recommending, must go by entries m the last Government valuation rolls, although you must know tliat such entries are hardly* ever actual values, and are not reliable. "In your letter, with regard to securities offered Nos. 1 and 2, you take great exception to the fact that the owners, m applying for loans, have disclosed certain uses to which the loan moneys, if ob-> tamed,, will be applied, such as 'surveys, roading and bringing the land into profit-: able occupation' ; but this is merely a. side issue, and you seem purposely to ignore the fact that the land m it? present state fulfils condition No. 4. as set forth m your letter under reply — viz;, 'the amquut applied for should not be greater than three-fifths of the amount of the last Government valuation..'---"No. 1: In this case amount applied for is £10,000, the last, Government valu-? ation is £17,666, three -fifths of wliich is £10,563. . "No. 2: Amount applied for £7500, the last Government valuation is £19,505, three-fifths of which is £11,703. "No. 4 : In this case application for £2000, you say that on Government valu-. ation only £1728 could be granted. If a more modern valuation did not alter this- the lesser amount would be accepted. "No. 5 : Same remark applies m this case. I "Nos. 6 and 7: In both these cases the applicants are erecting m brick which, when completed, will give ample margin, and the money would not be finally handed over nntil completion, as m the case of loan from building societies, although the mortgagor would pay interest on the whole amount at once. "Parenthetically, I may remark that any proper report and valuation for loan purposes must cover the elements you mention, 'saleability, access, prospective damages, etc' "My Board regard your letter nnder reply as an effort to justify the laxness. of the post four years or so, m the investment of my Board's funds ; and my Board is also of opinion that if the methods of selecting investments on real property outlined m your letter are adhered to the funds m question will remain m the limbo ' of your oflice. 'Common Fund' indefinitely. Better say at once that your Board will disregard all recommendations from this Board, for the conditions you set up are unreasonable. Upon proper enquiry and valuation, the securities offered wili be found to be such as any trustee ought to approve of and be thankful to hold. It is tolerably -plain that between your Board and my Board tlierje is divided authority, and there will be conflict., You, of course, cannot be held responsible for the legislation wliich causes such conflict, buljj. it is a curious result that the- settlers of this district, -who are responsible for the harbor loan, and who can easily meet their obligations and manage their own concerns, should have their^ funds held by a Government Departments at 1£ per cent, less interest tlian this "Board can invest them locally with perfect safety. "My Board trusts tliat further consideration by you and your -Board will result m some action on your part more satisfactory 'and more favorable to the interests of the Board tlian 'your letter under answer indicates. My Board, waits anxiously the Tesult." | The Chairman regretted there was not a- larger attendance at the meeting. .- Mr Whinray considered the letter was a concise exposition of the position. Tlie matter was iv a most anomalous position, and the security for the loan had increased threefold. What liad been, .published favoring tlie Trustee's side of the.question was mere fudge, and he' was surprised that local .people would lend themselves to championing the Trustee. Mr Whinray considered that the overtures, made to the Trustee were most reasonable. __„ Mr Harding was surprised at Mr WhinI ray taking any notice of the articles published, or of any paper m the coolny, as the opinion was only that of one man, and often a matter of /business. H e had thought when he became a member that they would have some authority over the money. If they liad not it was time they knew it. and then they would not be branded with staying on the Board and doing nothing. The- letter just read was most reasonable, and' if anything it should be made stronger. The quibble about office expenses was mere nonsense The Board should have an. opportunity of getting the money to loan out on approved security. He moved the adoption of the letter. Mr Matthewson thought the reference to the Supreme Court should be left- out. It was a veiled threat. The Chairman read the portion of the letter referred to, which stated that the Trustees seemed determined to refuse any investment offered by the Boai d; unless by some action, m Court the Board could compel performance. ■ Messrs Harding and Sievwright did not think this was a threat. „ Mr Matthewson said the only thing for the Board to do now was to see that the Trustee invested the money on the securities offered by the Board. ' They did not want the Trustee to take their values^ — he -could get an independent value. He thought it would be prudent to leave the portion referred lo out. Mr > Sievwright thought the letter was a good one. and it should go. It would strike anyone outside that il was a remarkable positiow that the- Board were precluded from making any investment of their money. •. Mr Harding : Or suggesting. Mr Sievwright said it was only recently that they saw their interest was .inrinishinp. Unquestionably Parliament intended that the money when invested should be invested at the highest rate possible. Parliament did not intend that they should make a loss. After further discussion the letter was adopted.