INTEREST RATES

Otago Daily Times, Issue 21569, 15 February 1932, Page 10

INTEREST RATES

TO THE EDITOR. Sir, —Congratulations to Mr A, M. Seaman for having, in his presidential address to the members attending the annual meeting of the Chamber of Commerce in Auckland, had the courage to express his views in regard to the present burdensome interest rates payable on debentures, mortgages, and other loans. He has given expression to the opinion of hundreds of business men to-day throughout New Zealand. Most of us realise that the cause of the depression to-day is the high interest rates, overhead expenses, rentals, and over-valued properties. When you consider that our national debt assumes the magnificent sum of something like £288,000,000, for which we have to find interest at the rate of 5 per cent, per annum, it is quite evident to all and sundry that New Zealand is staggering under a heavy burden. Then, with the rate of exchange against us, we have to find some £14,000,000 annually for service of debt, English and local. One begins to realise how difficult it is for us to meet our engagements, especially when our exports will amount only to something like £35,000,000, out of which we have to pay some £25,000,000 for imports, while the Government requires £14,000,000 for interest. It seems to me that the time is long overdue when a readjustment should be made throughout the world. The unfortunate position is that this money is practically all owing to Great Britain, and it is hard to ask the Mother Country, with war debts and interest amounting to some £2,282,000,000, to reduce her interest charges, though it is quite evident that something will have to be done throughout the world to relieve the present position. It would be a graceful act if America would agree to accept from her debtors a payment of 10s in the £l, and further reduce her interest rates. Then we in New Zealand could approach the Mother Country with more confidence and ask for a similar concession to be made in regard to our war debts, which amount to some £80,000,000. Unless something is done, it appears to me that the whole world currency, assets, and liabilities, will have to go into the melting pot. Business men realise that, to secure payments of capital even without interest, it is necessary at times to reduce customers’ accounts fully 50 per cent. Now the favoured few —the money lenders, the banks, investors holding bank and insurance shares, owners of city properties, etc. —have, during the last 25 years, been receiving good interest for the money they have_ invested. Their principal has been repaid in interest time after time, and the only solution of the present unsatisfactory conditions that now prevail is, I firmly believe, cheaper money, lower rentals, lower overhead expenses, and revaluations. At the present time a number of those who rent business premises, especially small shopkeepers, are finding it extremely difficult to meet their engagements. Something will have to be done, and that speedily. Otherwise financial disaster will inevitably follow.—l am, etc., E. Oswald Reilly. February 13. [The principal mortgagee in New Zealand is the Government. A reduction in the rates of interest on moneys lent by the State Advances Department would, in present circumstances, involve an increase in taxation. — Ed. O.D.T.]