UNEMPLOYMENT AND INTEREST RATES

Otago Daily Times, Issue 21390, 18 July 1931, Page 16

UNEMPLOYMENT AND INTEREST RATES

TO THE EDITOR. Sir, —We have heard a great deal about haw the different parties in Parliament are going to solve the farmers’ difficulties, help the unemployed, etc. The United Party has made some effort to find work for the unemployed, but, as to helping the farmer —who is living on air—has done nothing. The high rate of interest is what is - crippling both the farmer and business man to-day, and if this is not reduced things will go from bad to worse. If a fair rate of interest were charged by the banks and other lending institutions, a number who are now unemployed would have work to do, as the business men and farmers could afford to give employment instead of having to reduce their staffs. It is of no use for Mr Forbes to ask lenders to reduce their interest charges. I have not heard of a single one doing so. What is wanted is to put a strong Government in power, with some backbone in it, to do things that require to be done —not a muddling, spineless lot such as we have in office at present. It is ancient history to remember that had not the Government come to its aid the Bank of New Zealand would have been out of business years ago. Since it was saved by the people of New Zealand, it has steadilypaid a dividend of not less than 10 per cent, per annum, and I Understand, Sir, that the Government is the largest shareholder. If such be the case, why is it that it does nothing to bring down the rate of interest in this institution? It is true our Government has made a move in the proposed reduction of interest by h per cent, on Government securities, but this will not help those who _ haye over drafts from, banks or other institutions, and it is not going in any way to help the farmer, who is New Zealand’s backbone. .

The bank rate in Victoria, Australia, has, we learn, been brought dawn to- 4 per cent. Yet ours in New Zealand is still at an inflated figure. Salaries generally throughout this country have had drastic cuts, and traders generally have had to curtail their staffs. The farmer's are having a sorry time of it, and as I have already said, are living, on air and expectations of a revival of prices—a forlorn hope just now—while our army of unemployed is not growing less. If the banks could be induced to reduce their rate of interest to something reasonablesay, 5i per cent, per annum —trade would revive". I wish to remind you, Sir, that most of the farmers are now paying 8 per cent, to 10 per cent, for their overdrafts, and under present conditions it is impossible for them to pay interest at these rates. The only remedy I can see is for the Government to put a super tax on all moneys that earn more than 5 per cent, lent out on interest. The high price of money is the cause of all the depression jn the world to-day, and thp few who are reaping the benefit are living on the grief and misery of others. —I am, etc., Reform. [A reduction in interest rates will become effective on August 1. — Ed. O.D.T.]