OVERSEAS DEBT

Timaru Herald, Volume CXXXVII, Issue 19587, 6 September 1933, Page 10

OVERSEAS DEBT

INTEREST PAYMENTS IN STERLING TRANSPORT BOARD’S DECISION By Telegraph—Press Association AUCKLAND, September 5, The Auckland Transport Board, at a special meeting to-day, confirmed its decision, made in committee, to pay. a half-year's interest on its loan in British currency, without the right of recovery, in terms of the telegrams exchanged with the Rt. Hon. J. G. Coates, and to send the chairman, Mr J. A. C. Allum, to London to negotiate with the bond-holders. There was a keen debate.

Mr W. H. Nagle pointed out that the payment of a half-year’s interest in full—£6ooo, plus the expenses of Mr Allum’s trip, would raise the Board’s estimated deficit to £16,000. Mr T. Bloodworth declared that there was no legal or moral obligation to pay in sterling. The bondholders had their remedy in the court. He referred to Mr Allum’s “problematical mission,” and said that if the Board had remained firm it would have achieved its object. Mr G. R. Hutchinson agreed that the Board had no legal right to pay in sterling, but said that there was a prospect of recovering more than the extra expenditure as a result of negotiations. The Board had no right to jeopardise big conversions and transfers. Its decision was in the national interest. Mr Allum said it was incorrect to say that the deficit would be raised to £16,000, as provision had been made to meet it. Mr Nagle said that what was behind the whole thing, was pressure from England, supplemented by pressure from the New Zealand Government. A deliberate bogey had been raised in respect of the future credit of the Dominion Government, which had not played its part. It had been responsible for the high rate of exchange, but it had done nothing to relieve the local bodies tf the extra burden. Mr Grey Campbell said that the Board's earlier decision had caused a definite reaction against the financial interests of the Dominion. There would be no chance of converting the loan if full payment of the interest was not made. Mr Allum said the difficulty was that the Board was trying to run a business concern under political rules. If it had been a private business, there would have been none of this discussion. The Board would not have paid, and that would have been the end of it. That was the position of many business firms in New Zealand to-day. He replied to the various points raised, after which the Board’s decision was confirmed, Messrs Nagle and Bloodworth dissenting.