PAYMENT OF INTEREST

Evening Post, Volume CXXI, Issue 137, 11 June 1936, Page 8

PAYMENT OF INTEREST

(To the Editor.) Sir,—Some people in New Zealand are beginning to think that the Hon. Walter Nash, Labour Minister of Finance, pledged to use the credit of the State, now legislating to borrow money at interest from private sources, is moving in a direction that will pot be advantageous to the Labour Government. It is noted that he states that unless money is borrowed at interest, the savings of the people in the Savings Bank will be adversely affected, likewise the bonuses on life insurance policies, etc. This is a different story from Labour's pre-election speeches. Now, Sir, I submit that if the. Minister desires to carry out the Labour platform of using the State Credit,

without interest in the ordinary meaning and application of charge, then he could do so in the following manner, which, over a period, would lead to the abolition of private interest for profit, and at the same time equalise the incidence of interest payable by those who have borrowed from private lenders in the past. The principle covering such a procedure is that the State will issue all credit for public and private purposes, charge interest at a rate to be determined, say 2 per cent, or 3 per cent., so that after a lapse of time the majority of the borrowings in the country will be from the State.

The effect of the principle will be that the interest paid to the State will be used for payment of Civil Service salaries, pensions, hospitals, social services, etc. At present the foregoing services are maintained by taxation; therefore if the interest paid to the State is diverted to these services, it would result in an immediate lessening of the taxation in direct ratio. In other words the interest paid to the State is used for its social services, so enabling the taxation of the people to be reduced by that amount. At the same time this would not cause any heart-burnings in those paying interest to private lenders for money borrowed in the past. In short the interest paid to the State by bororWers from the State, would be returned to all the people, through the various activities of the State, and so by lowering taxation, would act as a partial remission of interest to those paying interest to private lenders. —I am, etc., H. H. DIMOND.