Untitled

Hokitika Guardian, 9 February 1927, Page 2

The New South Wales Government has been forced to borrow in New York after all, and according to Premier Bang the terms are better than could have been obtained in London. This is probably correct to some extent, for after the attack on the credit of that State by a couple of London stock brokers, and the extraordinary failure of the last New South Wales loan, it is very likely that the underwriters laid down some vein- harsh conditions, such as for instance, that a full and accurate statement of the finances of the State should be given in the prospectus, and that a sinking fund for that seems to he the general rule on tho New York able but that more attention must be paid, to pj-oviding effective sinking funds for all loans. The Victorian Government recognises this, and in tho

closing hours of the Inst session passed an Act, the object of which is definitely to apply a redemption fund in a scientific manner to the reduction of railways and waterworks loans. At present that State has two substantial sinking funds. The first is a subscription of I j per cent, per annum of the amount of the liabilities for roads. The next is an annual contribution of 2 per cent, in respect of other nonreproductive works, such as schools etc. constructed. out of loans. The object of the new Act is definitely to apply redemption funds in a scientific manner to the redemption of railways and waterworks loans. In the case of waterworks, which, admittedly are not subject to the same wear and tear, as railways, a longer existence is allowed. As a consequence, the Act fixes in respect to railway loans a definite contribution of 5s per cent, from the annual loan redemption payment, and of 2s 6d in respect of waterworks borrowings. In the one case investment of the funds set apart at I per cent, will result in the liquidation of railway loans in 72 years, and of waterworks loans in 88} years. As the

Act is definite in its terms no treasurer will be able to seize redemption funds.