SANE FINANCE

Hawke's Bay Tribune, Volume XXIII, Issue 76, 11 March 1933, Page 11

SANE FINANCE

THE TRUE NOTE. GOOD TIMES IN SIGHT. The financial world has been lopsided for a long time, not only in New Zealand but throughout the whole world. The harmony had become a discord; there was no true note. It was as if a musical leader had sounded a note in a key that was too high; and tho orchestra put down their instruments and ceased playing. Everywhere in New Zealand men who were waiting for a lead in business have done the same as the orchestra—they have ceased operations because tho rate of interest was too high. There Are signs that this inaction will soon be over, and once the loan conversion is out of the way, it is expected that there will be a general loosening of canital which will become available for industrial and other activities. This will mean more work, and none will be happier to hear of ilhis th,® the young men. New Zes-

land, who for nearly two years have had little opportunity to launch out in life. One reason for the high rate of interest was that the world was prosperous and money was needed for many great enterprises, both private and public. Then the war came and further upset matters financial. So in the last 20 years the rates of interest on Government loans steadily increased till these gilt-edged securities carried interest which was not warranted in such safe investments. Investors do not hope for a high interest where there is no risk. On the other hand, from such investments as second mortgages, mining shares aud such, high returns were needed to compensate for the risk of the investments. The return to the lower rates of interest has been going on throughout the Empire during the last two years, and New Zealand is one of the last countries to embark on a concerted plan to reduce interest. The absolute necessity for action, however, has culminated in the loan conversion scheme, which is now being carried to success. The anomaly of the financial position is that there are ample funds held by companies and private individuals to start the wheels of industry running at full pressure. Where there is a will there is a way; though the way has been clouded by the discord which has prevailed. But it will now be evident to all, since the high interest problem is being solved by the conversion of the country’s internal loans to a flat rate of 4 per cent. That is the keynote of the financial situation in New Zealand, the true note which men have been waiting for; and it is a fair note, well within the reach of all the players. Soon the orchestra of industry will be in full swing, working to the key which the stabilisation of interest through the loan conversion has sounded.

It behoves all bondholders to join in the harmony, the growing volume of which is seen in the streams of loan conversion acceptances which arc being received by the Treasury every day.