BIG SAVING IN INTEREST

Southland Times, Issue 23897, 16 August 1939, Page 5

BIG SAVING IN INTEREST

AMORTIZATION PLAN IN LOAN PRAISE OFFERED TO TOWN CLERK A statement that the Invercargill City Council was leading the way in a system of finance which promised to save local bodies in New Zealand very big sums of money was made by the Mayor (Mr J. R. Hanan) at the meeting of the City Council last night. He warmly praised the town clerk (Mr W. F. Sturman) in introducing the amortization principle in raising corporation loans. The Mayor said that 92 per cent, of the council’s loan of £47,000, which opened on August 1, had been subscribed and only £2OOO or £3OOO had not been applied for. In the past it had been the practice for local bodies raising loans to establish a sinking fund for the accumulation of repayments. Interest was paid on the full amount for the full term of the loan, but only 3>} per cent, interest was received on the sinking fund from the sinking fund commissioner. The town clerk had succeeded where only one investor was involved in issuing debentures for different periods, which meant that as sinking<■funds accumulated the debentures were paid off and cancelled. In the present loan, however, he had succeeded in getting authority to issue debentures for varying periods and the amortization principle was now being applied on loans in which there was a big number of investors. He believed that this was •the first such loan in New Zealand where the principle had been approved by the Local Bodies’ Loans Board and he considered that much credit was due to Mr Sturman. In this case Invercargill was showing the way for local bodies throughout New Zealand to save big sums of money.