ABOUT BANK RATES.

Hokitika Guardian, 3 December 1929, Page 7

ABOUT BANK RATES.

“From the standpoint of the h&nk/er nothing could possibly be worse than an expensive bank rate,” writes “A Banker” in the “Daily Telegraph.” His margin is not merely decreased, but his ability to assist his clients at reasonably low rates of interest is seriously diminished. The banker’s ideal is a bank rate standing round about 4 per cent, or 4.J- per cent., for at those figures his profits are probably better than at any other stage. At the same time, a great deal of ill-informed criticism is often written about the effect of a l.'gh bank rate on trade in general. If we pause for a moment and work out arithmetically exactly how much additional weight is carried on a ton of grain or a bale of cotton, it will be seen that an increase of 1 per cent, in the Bank of England rate of discount is not a serious item in those* costs. (Similarly, a manufacturing business, if carried on on sound, lines (by which is meant one mainly relying on its own capital and having recourse to the bank only for the purpose of its seasonal trade), would not find in the total of the costs which it has to add on to manufacturing costs that is to say, overhead charges, any very great change per cent, of its turnover due to the addition of 1 per cent, upon its interest costs.”