RATES OF INTEREST

Dominion, Volume 13, Issue 34, 4 November 1919, Page 6

RATES OF INTEREST

AND LOANS TO LOCAL BODIES. A statement about the rate of interest at which local bodies may borrow money was mado bv the Minister of finance (Sir James Allen) in the Ilouso yesterday afternoon. The Minister said that ho had been asked to allow local bodies to increase Hi-,-rntc of interest at which they could borrow money from 5J to 51 per cent., or to some higher rate. His reply was that the rate of 53 could not bo allowed to be increased, a,s such au increase must have the effect of raisins the rate of interest generally throughout the country for all borrowers. Sir Joseph' Ward said that die had noticed that legislative provision had been mado for the raising of the rale of interest? to 5J per cent, in the case of onu local body. Sir James Allen said that the circumstances of this local body had been somewihat extraordinary. The money hud been expended, and a sum was still required for tho payment. It was not possible to get tho money except at a higher rate than that fixed for the loan originally, and tho permission had been given to raise tho rato of interest to a{ pci cent. Mr. Nash said lihat it was impossible for local bodies lo get money at 5J per cent. What were the local bodies to do? Would the Government come to their assistance? Sir James Allen said that tho Government! could assist them In the extent of JCIO.OOO from the Stale Advances Office, Mr. Nash: WMiat if they want more than that? Sir James Allen said that tho Government would do its best to assist them. Tho Minister referred also to the advances to be made to local bodies for expenditure under the Housing Act. Tho utmost that could be advanced to any local' body at the rate of -11 per ceni, from the State- Advances Office would 1)0 ,£lO,llOO. If some limit such as this were not fixed, the larger local bodies would absorb all the funds available. If any local body required more than this sum, as doubtless many of thorn would, they would be able to get it, but they, would probably have to pay a higher' rato for it.