Interest Reduction

Dominion, Volume 25, Issue 168, 12 April 1932, Page 11

Interest Reduction

Sir, —1 have read with much interest the opinions which have appeared from various sources dealing with the matter of reduction of interest. 1 have come to the conclusion that in order to arrive at an equitable solution there must be differentiation between, (a) the Government, (bl the private individual, as a borrower. In the case of (a) the points to be considered are these: If interest is reduced the prestige of New Zealand will suffer overseas, and therefore her power of borrowing will be impaired. Government investments always bear a low rate of interest because they are considered to be absolutely sae. Voluntary conversion, however, is quite another matter, (b) In the case of the individual borrower the rate of interest is generally higher because the risk is greater, but surely the time at which the transaction was made should be taken into consideration, because this transaction may have been completed either at a peak of prosperity, such as 1919 or 1929, or duriug a. period, of temporary depression, such as 1914 or 1921.

It is surely a matter of common sense and one of enlightened self-interest to make a temporary reduction of interest during a grave crisis in order to enable tine borrower to carry ou until such time us the depression lifts, when he would tbeu bo iu a position to return to his original contract. The finer motive wliieli should influence the lender at a time such as this, is the motive of patriotism, aud the feeling of satisfaction at having made a tangible contribution to the recovery of the country as a whole. —1 am, etc., VISION. April 8.