Abolition of Interest

Dominion, Volume 27, Issue 190, 10 May 1934, Page 14

Abolition of Interest

Sir, —Over the signature of “N.Z. Welfare League,” n writer in your influential paper recently made the inaccurate statement (quoting authorities) that it was impossible to reduce working hours without causing (1) a reduction of wages or (2) an increase in. costs harmful to our international, trade. As this statement, may be accepted as true, to tho detriment of economic reform, please let me deny it and give proofs. . Working hours may be reduced considerably without lowering the weekly wage and without increasing the cost of production by the single expedient of abolishing interest. It is commonly estimated that interest increases costs by one-half on farms and one-third or onequarter in many other industries and businesses. The total interest bill of New Zealand on the National Debt and private mortgages, aggregating about £500.000.000, exceeds £25.000,000 every year. This is 30/- per household every week —an almost incredible fact. Need we look any further for the cause of the depression? And can any scheme cure it while tiiis tremendous squeeze continues to operate? The abolition of interest can be accomplished by paying -off the creditors with State credit (not borrowed). This State credit will be legal tender and can be lodged in banks as a deposit and be operated on by cheque. It will be paid direct to the internal creditors and indirectly to those abroad by the expedient of purchasing exports and realising in London. The result is that we still owe the £500.000,000 by reason of tile fact that there is that amount of State credit on issue, but instead of owing it to moneylenders who charge interest nt the rate of 30/- per week per household, wo owe it to ourselves and charge ourselves no interest. The State, instead of the private lender, will now hold the securities of the private mortgagors, who will in small instalments, repay only the principal sum,, thus eliminating the debt and redeeming the credit issue. A sinking fund will do the, same to tho National Deht_ portion. O' course this will disturb the moneylending business and give rise to direct investments in now enterprises. Capitalists will be advertising for working partners, There will be n revival of now r industries. Bankers will become invest-ment-advisers and managers’. There will be full employment nt full wages for fewer working days for all the population on a sound permnnent basis. The fewer working days can be assured Uy Act of Parliament.—-I am. etc.. ARTHUR SAINSBURY. Auckland. May 7.