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Hokitika Guardian, 5 April 1928, Page 2

Tiif. public response to the demand for money for rural credit bonds has not Ixxm good. A lack of candour on the 'part of the Government is alleged, mainly in respect to the nature of the security for loaned money. Judging by inquiries made at Wellington by a newspaper reporter, it appears that the public response to the Government’s recut invitation to it to take up rural credit bonds to the amount of £400.000 lias not boon generous. Tho reason generally assigned for this is that there was a lack of .straightforwardness on the part of the Government over the issue of the bond. The prospectus stated that the loan was authorised by and with the approval of tho Minister of Finance, and that the issue of bonds is authorised by an Act of the General Assembly, hut that the bonds are not chargeable on the public revenues of New Zealand. They are, however, fully secured on the assets of the Rural Advances Branch of the State Advances Office. The principal moneys and all interest accruing thereon are made payable onl of the Consolidated Fund, and are recoverable from the. Itural Advances Branch account of the State Advances account. The impression left on some minds by this statement of the security for payment of the bonds and interest on them is that (be loan is not a Government luan, and yet the Government is behind it. Ordinary issues of Government loans are a charge upon tho public revenues of the State issuing thrfn, hut these Government bonds do not appear <<, l>o so secured. Section 8 of the Rural Advances Act says that the principal and interest in respect of the bonds shall be payable out of the Consolidated Fund. The interpretation place I upon Ibis provision by local financial authorities is that the Treasury must pay out of the public funds the principal and interest of the bonds. “Tho Government knows perfectly well,” said one authority. “that it intends to pay out of the public funds, and it has tho noecissarv authority for doing so. Therefore it should have boon open and above-board about its liability, and taken the public into its confidence. Unquestionably the country is responsible for the payment of the bonds and the inlerest.” Another opinion was implied in the question: “Tf the Government did not pay on those bonds what chance would it have of floating allot her loan ?”