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Dominion, Volume 6, Issue 1572, 16 October 1912, Page 5

; AN ILLEGAL PRACTICE. OPINION OF THE SOLICITOR.GENERAL. "October 2, 1912. "Please advise me whether the board has power under the Act to commit the country to expenditure beyond the current year in which tho loan, is being-dealt with. .The position that has arisen is as .follows:— ■ "The board has committed the country to loans payable.partly in one year, partly in the succeeding years. Loans have been granted at 31 per cent interest; to borrow now costs 3} per cent; the country must therefore make a loss of } per cent on commitments that still have to be dealt with. Does the Act contemplate this? If .the action of the board is in accordance with the lair, what legislation can you suggest to protect tho country from the loss? "(Sifirned) J. ALLEN. "An early answer will oblige.— ,T.A." The above letter was minuted bv the Attorney-General to the Solicitor-General for an opinion. . The reply of the Solicitor-General, is as under October 5, 1912, "In accordance with the existing regulations a- to loans t,o local authorities, the board is in the habit of entering into contracts with lncnl authorities to grant them loans payable at future dates or by instalments i extending over a period of two years; ur, in special ca--es, lour years. These contracts fix the rale of in'torc<t at which thc-e lo;nis or instalments are to bs granted, and it may happen that the rate f-o fixed is less than (ho rate nt. which the money .is subsequently-raised bv tile Government In nipot. Thee loans. I am of opinion that llii* practice is illegal, and should be discontinued. ]t is provided by Section Tn of tho >.'eir faa. .land State - Guaranteed Advances Act,