TENDER TREATMENT

Grey River Argus, 29 April 1932, Page 8

TENDER TREATMENT

For the Banks BY THE COALITION. REDUCTION QUESTION. (From Our Parliamentary Reporter.) WELLINGTON, April 28. During a discussion in the House today on the banks in relation to the general sacrifice occasioned by the depression,. Mr Forbes gave a hint that the banks would again reduce their rates on advances by one-half per cent, after the Expenditure Adjustment Bill had been p’assed. ..Mr Polson, submitted an amendment for the purpose of including under the term il mortgage” any moneys advanced by a bank, whether at call or on fixed deposit. Mr Polson said that this would place the Government in command of the situation. At the present time, there was no compulsion on, the banks to reduce their interest rates. Mr Forbes said that the banks were now carrying the farming institutions. To pass this clause—that would result in an arbitrary reduction in the rate of the banks’ interest charges—would have the effect of creating a feeling of instability The Government’s guiding principle was the reduction of fixed charges, in order to meet the fall in the price level. Very many contracts were entered into up to 1930 in the full belief that the high prices then ruling would continue, but the Government had to legislate to adjust fixed charges with the changed conditions. The banks had already reduced the rate on their advances by one-half per cent., and he was given to understand that ther e would be a further reduction once the present Bill were put through. “I have no doubt that the reduction will be a half per cent.” he added. “That will work out at a reduction of 16 per cent., and that will go a long way toward meeting the position. We want to encourage the banks to lend their money, as far as possible, to the farming community.” Mr 11. E. Holland asked what objection there could be to the acceptance of the amendment if .the banks were actually making a general reduction in their rates. Mr Forbes replied that it was better to deal with the banks on a voluntary basis than to introduce any measure of compulsion. Mr Polson later altered his amendment to apply to “moneys advanced by any bank,, whether o n demand or on fixed loan.” Mr McCombs said this was a elimb down.