“SUPPLY OF MONEY IS GREATER THAN DEMAND

Manawatu Times, Volume LIV, Issue 6942, 22 June 1929, Page 2

“SUPPLY OF MONEY IS GREATER THAN DEMAND

KATES OF INTEREST In July laßt rates. of interest on fixed deposits for ono and two years were reduced by l per cent., and the rate on best overdrawn accounts was also reduced by % per cent, states the annual report of the Bans of New Zealand. ' It is, of course, always a- simple matter to reduce interest rates and so lessen deposits, but it was not so long ago that the banks in Now Zealand were compelled to raise rates in order to retain and augment their deposits, and notwithstanding the present excess, it would be inadvisable to make any alteration in the rates now existing. * The majority of people are lenders, not borrowers, and care must be taken that deposit rates arc not reduced to a figure that would divert money in largo quantities to other ..'countries for investment where, at the t present time, a better rate on equally good'security is obtainable; money can be easily and inexpensively transferred from ono country to another. The Bank of England, consequent on conditions prevailing on the New York money market, found it necessary to increaso its discount rate by 1 per cent, on February 7 last. As our bank has a large amount of funds invested in British Treasury bills and other shortdated investments in London, this increase in rates has benefited us materially. The rise referred to, while benefiting lenders, had an opposite effect on borrowers; consequently, for- the first time in history, New Zealand local bodies are finding it. cheaper to raise their loans in the Dominion than abroad. Recently a number of 51 per cent, issues have been placed on thi3 market at par with little dr no flotation expenses. - The supply of money available for loan on mortgage against good security is greater than tho demand. The ruling rato for such loans is 6 per cent., though occasionally a little less is accepted for particularly choice business. It is pleasing to note that Sir Joseph Ward, as Prime Minister and Minister of Finance, has made it clear that it is the intention of tho government to check governmental interference with business carried on.by^private-enter-prise. It is to be hoped also that, in the readjustment of taxation he foreshadows, government and municipal trading concerns will ho required to pay rates and taxes on a. basm.sirailnq to those paid by other traders and financial institutions in the community. If these two matters are rectified, a long-standing grievance- will be removed, the burden of taxation will be more equitably distributed, a greater confidence will be engendered and an impetus will be given to the industrial life of the countrv.