BOROUGH COUNCIL.

Taranaki Daily News, 20 June 1921, Page 4

BOROUGH COUNCIL.

PROBLEM OF FINANCE. HIGH RATE OF INTEREST. The difficulty of raising loan moneys in view of the present high rate of interest is touched on by the borough general manager in reporting to the NewPlymouth Borough Council on the position of the £57,600 loan. The report j remarks that possibly residents desirous of having works carried out might assist the council by taking up debentures at 5| per cent to the value of the particular street allocation. The report » as follows: With the high rate of interest now ruling, and the maximum interest payable on this loan, being 5| per cent it ia manifest that it will be many years before the balance of xhe loan can be floated. Unless financial assistance inj some way can be obtained from residents interested it is evident therefore that the various works comprising balance of the loan schedule cannot proceeded with. The example set by the residenta od Frankleigh Park who took up at 54 per cent to enable the work in Govett Avenue to be proceeded with indicates one way in which financial as< sis tan ee can be rendered by residents in< terested. Inspector Day has, in of conversation with me, suggested an* other way which seems worthy of con* sideration. He suggests that where the residents are unable to find money fol investment in the debentures at the IoW rate of interest they might be able tq find the difference between the fac4 value of the debentures and the reduced price at which such debentures would require to be sold to produce the ruling rate of interest. This can be better explained by trik« ing an example: Assuming the ruling rate of interest at present to be 7% pel annum each £lOO debenture at sy g pel cent would require to be sold for £B4 | to return 7J per cent to the lender; " that is to say at a discount of £l<s pq debenture. In the loan schedule then is an item asphalting footpath on thi south side of Devon Street, from th< Henui bridge to Darnell Street, £56J< Before this work could be authorised six debentures would require to be sold. Fitzroy residents would therefore, under such a scheme be asked to find the discount on six debentures, a total of £9O. This may seem a fairly large amount for the residents to find but I have no doubt that if a special “day” was properly organised no great difficulty would be experienced in raising the amount required. If successful in one totality other localities would no doubt follow suit.