I. -11a.

38

ij. W. POYNTON.

116. And of that amount how much was actually paid over to local bodies? —To the 31st August, £1,481,700. 117. Of the total amount that has been advanced under the State-guaranteed Advances Act, have the local bodies to repay to the country the whole of the capital and the full rate of interest charged to them? —Yes. 118. And in contradistinction to the loss made under the old system of at least £2,300,001), all of which is lost to the country, so far as the repayment by the local bodies is concerned, the whole amount advanced under the State-guaranteed Advances Act has to be repaid in full, with interest at the same rate that the country pays upon it to the State? —Yes, that is the system. 119. Any suggestion of loss upon the moneys advanced under the State-guaranteed Advances Act is due entirely to the non-investment of available funds for advancing to local bodies?— Yes. 120. And the amount of that loss upon the £1,481,700 already advanced is about £23,000? —About £23,000 of a total loss. 121. Am I light in saying that under the State-guaranteed Advances Act, excepting the loss of interest upon the money uninvested, as against the old system the country is saving the whole of the capital advanced to the local bodies? —Yes, the capital has to be repaid. 122. Would you look at the return of securities held by the Postmaster-General in regard to Savings-bank Fund on the 31st December, 1911, and inform the Committee whether the amount is £15,303,321 lis. 2d.?—The return shows that. 123. Would you be good enough to inform the Committee whether the whole of the amount of £15,303,321, excepting an advance of £13,800 to the Oamaru Borough Consolidated Loan Debentures, £30,000 to the Patea Harbour Board, £10,000 to the lhames Harbour Board, £4,000 to the Timaru Borough Council, £100,000 to the Wellington City Council, £25,000 to the Wellington City Council, £28,900 to the Wellington Harbour Board, and £489,500 to the Westport Harbour Board —whether the whole of those items in the return certified to by the Post-master-General and laid on the table of the House.are not Treasury investments? —Yes, I assume they would be. Looking at the practice that prevailed, I should say the Post Office would ask the Treasury if it had any investment. 124. Has the Post Office ever advanced money to any one in this country upon mortgages? — I think not. 125. Since you have been Secretary to the Treasury, is it or is it not a fact that the Minister of Finance had to find investments through Departments of the amount available in the Post Office Savings-bank Fund for investment with such exceptions as I have just referred to, and some of them are dated thirty years ago?— That was the practice. The Post Office intimates to the Treasury that it has money for investment. If the Treasury does not want it, the Post Office looks round for investments. 126. In connection with the State-guaranteed Advances Department, would it as a matter of business have been a proper thing for the Minister of Finance to have stopped the PostmasterGeneral from investing Post Office Savings-bank funds with the State-guaranteed Advances Department before the State-guaranteed Advances Department could lend them out ?—lt would mean a loss to the Department. It was known that the local bodies required money, and all the money they could get from the Post Office, and it was the proper thing to put the money into the Advances Office. 127. If the Post Office had to depend upon the Treasury to find investments for nearly the whole of its funds, would it have been a proper thing for the Treasury from, time to time to say to the' Post Office, "We decline to allow you to invest sums in the State-guaranteed Advances Department or any other Department?—lt would'have been wrong. 128. Are you aw r are from the official records that the Minister of Finance in February last approved of all Post Office investments being made at a rate of not less than 3f per cent., except in the case of the moneys required for the State-guaranteed Advances Department which were fixed at '3J per cent.? —Yes. On the 11th January there is a minute addressed to you by myself as follows: " Lands-for-settlement funds are included in my minute. See words underlined in red. ' 3| per cent, all round (except for amounts already granted to local authorities at 3J), as suggested by the Post Office, should be approved." Then you approved it. Afterwards the question came up as to whether it applied to future loans. On the 11th January there was a letter from me to the Post Office following that minute, as follows : " Interest on Post Office funds : The Right. Hon. the Minister of Finance has approved of your proposal that in future all loans to the Treasury shall be at the rate of 3£ per cent., except for amounts required to satisfy loans already granted to local authorities at 3J per cent. No further loans will be granted at that rate." There was a little misunderstanding between the Treasury and the Post Office. The Post Office said their rate was for future renewals as well as for future loans, and Mr. Robertson wrote on the 15th February thinking we had committed a breach of agreement. The letter states : " It was recently decided by the Minister of Finance that all loans to the Treasury should be at the rate of 3J per cent., except for amounts required to satisfy the loans already granted to local ..authorities at 3A- pel cent. The Treasury recently renewed debentures for £194,200, and claim that they must receive the amount at 3J per cent., as it is a renewal of an old loan. I consider that this is a breach of the agreement that loans should be at the rate of 3| per cent., and I would recommend that the Minister insist on receiving that amount. As I have frequently explained, the margin between the interest earned on the investment of our funds and that credited to depositors is too narrow, especially considering that we carry over two millions and a quarter of inscribed stock upon which only 3 per cent, interest is paid. The matter is a very important one, as it is of the utmost consequence that the Post Office Savings-bank, for the financial reputation of the Dominion, should show a small margin of profit every year. Great public uneasiness would result if there were at any time even a small deficiency."