SHORT-DATED LOANS.

Timaru Herald, Volume CXXIII, 14 August 1926, Page 11

SHORT-DATED LOANS.

OFFICIAL ANNOUNCEMENT. Bj Telegraph— Press Association. AUCKLAND, August 13. The economy of short-dated loans for local body expenditure was mentioned by the Secretary of the Department of Health, Mr B, A. ICillick, in a statement at the sitting of the Auckland Hospital Commission.. Mr Killick illustrates his contention by presuming 'a loan of £IOO,OOO at 6 per cent. With sinking. fund at rates required to discharge it in ten, twenty or thirty-six and a half years, tho annual charge and aggregate payments would be as follows:—*■

“From this it will be seen,” Mr Killick said, “that there is some considerable difference in the burden of a ten and a twenty-year loan, sinking, fund being nearly three times as high in the former case, and the annual burden about half as much again, whereas the grand total does not show anything like the disparity between a twenty and a thirty 7 six and a half'year. loan. “In the case of a thirty-six and a half year loan, however, the annual burden is not so much lighter than that of a twenty-year loan as to b© an inducement to continue to pay 6 per cent in•■es for a further sixteen and a half years. There is no need to enter into tho question .whether prosperity should not b© asked to bear a portion of . the expenditure on hospital capital works. The posterity fallacy has long since been exploded by high authorities on economics and finance, quite apart from the possibility that may always occur of the early obsolence of hospital buildings owing to advances and changes in medical and surgical knowledge. Moreover, posterity was not asked to pay for the existing buildings, which were paid for at the time of their erection. ’ Once, therefore, the need for capital works is recognised, an endeavour should be made to pay for them in as short a period as possible.” '

Sinking Total Fund. Annual PayTerm p.c; Charge. ments. ,10 years ... 8 14,000 140,000 20 years ... 3 9,000 180,000 364 years ... 1 7,000 255,500