INTEREST RATES

Otago Daily Times, Issue 21601, 23 March 1932, Page 13

INTEREST RATES

TO THE EDITOR.

Sir,— -That the rates of interest must fall seems inevitable if New Zealand is to regain prosperity. It is this crushing burden of high interest that is causing most of our troubles to-day, and until this ig rectified things will go from bad to worse.

I notice that the bank rates in England have been reduced to 3i per cent. If our own institutions would follow their lead, I feel sure our troubles would soon be over, and prosperity would once more reign in our midst. It must be remem.bered that most of the borrowing was done when money was worth more than it is to-day, but values have fallen, and so interest should do the same. No one wants to interfere with capital. It is only the high rates of interests that should be adjusted.- The capital would still belong to the lenders, but they should not be allowed to charge the excessive rates they are charging. The Government is the largest moneylender, but there is no reason why. it should be called upon to make reductions, as the borrowers are not being overcharged. Our primary producers are supposed to be the backbone of the country, but I am afraid most of our farmers’ backbones ,pre getting very weak owing to the high rates of interest. They are still expected to pay 8 per cent, or more on their overdrafts and mortgages to the banks and other lending institutions, despite the fact of their being unable to make ends meet. I have not heard so far of these moneylenders offering to reduce their rates, although Mr Forbes expected them to do so. Our primary producers have no power to regulate their prices, as they have to sell in the open market. What is wanted is a tax of 30 per cent, on all mortgages and overdrafts bearing interest of more than 5J per cent., which would be a fair rate for anyone to gel or pay. The proceeds from this tax could then be used to help those who are being overcharged. If this were done the interest rates would fall immediately. —I am, etc., S. 0. S.