LOW INTEREST RATE URGED

Dominion, Volume 33, Issue 3, 28 September 1939, Page 11

LOW INTEREST RATE URGED

Loans For War Purposes

ISSUE OF RESERVE BANK CREDIT

The hope that if it were necessary to raise a loan for war purposes the high rates of interest paid in the last war would not be paid to the investor was expressed by Mr. Nordmeyer (Government, Oamaru), speaking in the second reading debate on the War Expenses Bill in the House of Representatives last night. He urged that, on the other hand, interest rates should be lowered. The suggestion had been made, said Mr. Nordmeyer, that at least some of the money required should be obtained from the Reserve Bank. No thinking person would contend that Reserve Bank credit could be issued without limit. But it had also to be realized that there was, after the first shock of the war, an impulse to increase production in all fields, and along with that there could legitimately go an extension of credit to keep pace with the volume of goods that came into being. Mr. Nordmeyer said he believed that the people of the country would invest at 3 per cent, and not expect the high rate of interest they received in the last war. The strongest possible case could be made out for lowering the interest rate for the occasion.

If the war lasted for a long time it would be necessary to make in the country goods which it had been customary to import. One of the factors which had a tremendous effect in making for business enterprise was to make money available at a low rate of interest.

“I hope this Government will show what can be done within the financial mechanism by seeing to it that if it is necessary to raise any loan for war purposes the interest rate, instead of being raised, shall be lowered for the occasion,” Mr. Nordmeyer said. “It is the policy that must be pursued by this Government.”