INTEREST RATES

Hawke's Bay Tribune, Volume XXII, Issue 268, 27 October 1932, Page 8

INTEREST RATES

MUST COME DOWN HIGH PRICE OF MONEY STRANGLING THE COUNTRY. MR C. A. WILKINSON’S VIEWS. (By Telegraph—Special to “Tribune.”) Wellington, Oct. 26. The cheapening of money was stated bv Mr C. A. Wilkinson (Egmont} to be one of the primary steps needed to bring about an economic recovery, in the course of an analytical speech during the Budget debate in the House to-dav. He contended that the rate of interest charged by lending institutions was much too high and that the position would have to be reviewed in the national interest. Mr Wilkinson said that the total Government, local body and private debt in New Zealand amounted to £600,000,000 and the interest bill was about £30,000,000 per annum, which was one-third of the national income. In his opinion the interest charge in New Zealand was far too high and would have to be tackled with a view to bringing about a substantial reduction in rates. In other countries people were enjoying much cheaper money. In Switzerland only a half per cent, was paid on deposit money by banks, and in Australia the bank rate was lower than it was in New Zealand. In the Commonwealth on deposits for three months 2} per cent was paid, while in New Zealand the rate for the same period was 3 per cent. In Australia the rate for two years was 3} per eent, while the rate in New Zealand for a similar period was 4 per cent. New Zealand was borrowing money on Treasury bills from the banks at up to 5} per cent. In Australia the rate t«-day was 4 per cent, and it was being reduced on November 21 to 3} per cent The Government should seriously consider why it should pay 2 per cent, more than Australia on its i.o.u’s, especially as New Zealand credit was as good as that of Australia.

“The high price of money is strangling this country,” said Mr Wilkinson. “If we are going to put things right we will have to bring down rates of interest. With a fall in interest rates there would be a fall in rents, as the two go together. I do not believe most businesses in this country can pay more than 3 per cent on their money. The rates that the banks are charging are altogether too high and as a result many businesses are existing simply to pay money to those institutions.”