THE NATIONAL FINANCES

Press, Volume XCV, Issue 28222, 9 March 1957, Page 3

THE NATIONAL FINANCES

Sir.—The reason why the interest on Government loans has risen is that money for capital works is in short supply. When money, like potatoes last year, is in short supply. the price < interest) naturally rises. The fact that thousands of people realised that in investing in Government loans they are helping to build schools, hospitals, colleges, hydro-electric stations, and other necessaries to make New Zealand more efficient and enjoyable to live in refutes Mr L. J. Spence's rather vague answers to his own questions. If Mr Spence has New Zealand's welfare at heart he will be saving his pennies until they are pounds and preparing to invest in the next loan floated by the Minister of Finance. There is no doubt that Mr Watts is steadily reducing the present inflationary trend®.— Yours, etc., RALPH S. WHEELER Timaru. March 8. 1957.

Sir.—l cannot understand Ralph S. Wheeler’s logic. An interest rate of 10 per cent, will reduce inflation. The interest rate of 3.01 per cent, in 1946 sets the norm of 100 for inflation for the period to 1956. In 1956 interest for Government loans averages 4.73 per cent, and the £ is then valued at 59. The higher the rate of interest the worse the inflation. Can Mr Wheeler explain this?—Yours, etc., AFP. March 7, 1957.