MONEY HARDENS.

Auckland Star, Volume LXX, Issue 209, 5 September 1939, Page 4

MONEY HARDENS.

POSITION IN BRITAIN

BANK OF ENGLAND RATE

The increase in the Bank of England rate of discount to 4 per cent from 2 peron" In™ wl V, c h stood since June «W, *932, if the first public step taken to hinder the outflow of money from Britain. Jt nuu ks, too, tlie end of the policy of cheap money which lias been the watchword of politics for over seven years past. A sharp rise m discount rates on three ttnd six months bills has also taken place. The influence of the bank rate on general interest rates, as recorded by the Macmillan report, i» that the rate of interest allowed by the trading batiks on London deposits repayable at short notice w 2 per cent below the bank rate. For a long time past the deposit rate has been in the nominal amount of one half of one per cent. Last week it wm 2% per cent. Che change in the bank rate now announced marks the conclusion of the longest period of an unchanged rate, certainly since 1879. As to changes due to the war, the experience of 1914 may afford some guide. On .July 30, 1914, the bank rate wan raised to 4 per cent from 3 per cent, at which it had stood since January 29' preceding. Following changes were July 31. to 8 per cent; August 1, to 10 per cent; August 6, to 0 per cent; August 8. to 5 per cent; and at t'm list-mentioned percentage it remained till July 13, 1916, when it was raised to 6 per cent.