THE BANK RATE

Evening Post, Volume CV, Issue 122, 25 May 1928, Page 11

THE BANK RATE

SHOULD BE REDUCED . OPINION 01? FARMERS (Special to "ThevF.vehing Post.") /MASTEKTON, This B,ay.' "That(the'Assficiatedßanks be asked' to reduce, the overdraft rate, seeing that thero is' an influx of thirteen millions extra capital into the Dominion this year was a motion proposed by Mr.: Hugh Morrison, and carried by the Wairarapa Provincial Executive of the farmers' Union at its meeting yesterday. .■■..'. In presentin,g ; the resolution, Mr! Morrison said .that a,nyone who ,had read the financial history of this or any other country* knew the import-' anco in bad times of having strong banks. Li the 'nineties, when banks crashed in Australia and here, unemployment was much worse than i( .was to-day. It was to the benefit of this country to have strong banks. . The action of the banks last year in raising the overdraft rate and. also the,rate on deposits might or might not have been necessary, but to-day, there was a great change.for the .better. ' While it was nocessary to have strong banks,, it was also • necessary to produce more and make the country wealthy: The only way could produce more was by improving the land, and most of the improvement carried out by, "farmers had to :be done on overdraft. How couM/they .do it if they had to. .pay... a big overdraft rate? Cheaper money was essential if they were to produce more. It was not good policy for the banks to maintain the present rate! If they continued to exact this rate they would give the Socialists an opportunity of saying: "We will have a State bank." He had never beea in favour of a State bank, and did not think he ever would be, because they ali know what political influences- and political pull meant in banking. At the same time,' if the private banks, when there was a great Credit surplus, did not assist the farmer to produce more by reducing the overdraft rate, this country was not going to advance aa fast as it should. It took very little to make the difference between success and failure for the man who had a lot of debts. A high interest rate was like the peak of a ridge. It elevated sharply the point that must do. passed, before easier progress was (possible.