INTEREST FREE CREDIT

Bay of Plenty Beacon, Volume 10, Issue 6, 2 August 1946, Page 5

INTEREST FREE CREDIT

COUNTY COUNCIL’S SUPPORT

ASSISTING RURAL DEVELOPMENT Writing the Whak'atane County Council at its meeting last Tuesday the League of Economic Democracy stated that at the 1945 Counties’ Conference a lengthy discussion took place upon the desirability of obtaining interest-free credit through the Reserve Bank for expenditure upon national undertakings such as County roading, draining, bridge building etc. Under the present system a £20,000 loan at 3| per cent, interest plus £5 4s per cent, sinking funds, redeemed the loan in 15 years and cost ratepayers £10,500 in interest alone, whereas under a reformed system a £20,000 loan at 1 per cent, (to defray administrative costs) plus 7 per cent, sinking fund would redeem the loan in approximately 111 years, and cost the ratepayers only £2300 by way of interest. Even the Minister of Finance would admit that a debt redeemed in 111 years and costing only £2300 was infinitely preferable to redeeming a debt in 15 years and paying £10,500 for the use of the money. The British Government had already made provision to supply local bodies with loans through the Treasury at approximately the same rate of interest that the Treasury itself payed. It is understood that this rate did not exceed 1| per cent. The Council decided to endorse the League’s proposition.