RATES OF INTEREST

Taranaki Daily News, 3 August 1931, Page 7

RATES OF INTEREST

CONTRACTS ALREADY MADE. STOCK EXCHANGE PROTEST.

Any interference with the contracts entered into by local bodies to pay fixed !rates of interest on debentures issued was condemned by members of the Auckland Stock Exchange on Friday. Resolutions were carried to the effect that the Exchange viewed with "rave concern any move by local body authorities to evade or defer payments to sinking funds, and strongly urged the Government to insist upon full P}"®* vision being made in accordance with existing law and the terms stated when subscriptions to. the loans were invited. The Exchange also decided that it could not too strongly deprecate the agitation by some local bodies to obtain legislative authority to reduce interest payments on existing debenture issues. Such action, the resolution stated, meant the breaking of sacred contracts, and must inevitably lead to the loss of capital and savings of the people, who in a great number of cases could ill afford to lose. Further, it must result in destruction of the credit of the issuing authorities concerned. Recent suggestions for interference with interest rates on existing loans were described an “unworthy of a British community” by the vice-chairman, Mr. John Frater, who moved the resolutions. He deplored the fact that such a spirit was developing. “We have always prided ourselves that contracts are adhered to in British communities,” said Mr. Frater. “Some people seem to be under the impression that these debentures are taken up by financial concerns that can well afford to have the rate of interest cut down, but we as brokers know that the majority of such issues are taken up by people of moderate means, who are willing to accept a lower return on local body and Government loans because there is no risk of losing their capital. People who accepted safe investments at lower rates of interest might just as well have put their money in other ventures which pay higher amounts, if contracts entered into are not to be maintained.”