DRASTIC LIMIT ON INTEREST

Stratford Evening Post, Volume I, Issue 90, 25 March 1931, Page 2

DRASTIC LIMIT ON INTEREST

LANG’S REDUCTION BILL EXPLAINED

NEW BANK. RATES

ON all existing and future private transactions, including those cf money-lenders, mortgages, and time-payment, there shall, according to the proposed Interest Reduction Bill, ioe a limit of 5 per cent. The plans of the State Government for reduction of interest were disclosed in the outline of Hie Bill, endorsed at yesterday’s meeting of the Labour Caucus, says the Sydney “Daily Telegraph.” The main general principle is that interest on all Government borrowings shall be reduced to 3 per cent. On second and subsequent mortgages it is intended by the Government that no more than (! per cent, shall he charged. The bill also deals with amounts placed on deposit with banks and other institutions, fixing periodical rates in this connection. The following table shows the maximum interest allowed in this connection under the suggested law: Deposit rates are fixed from three months: 3 months U per cent. G months 2 per cent. 12 months 21 per cent. 2 years or over .. 3 per cent. Under the new arrangement, oversea interest will not be included, but it is possible that it will be made the matter of negotiation. Clauses of the Bill will provide also for the exemption of the Government Savings Bank and the Crown from the deposit provision. Ministers, however, believe that the plan will give an impetus to industry, and an increased spending power, and that it will be eventually copied throughout the Commonwealth. Bill Condemned Leading business men condemn the proposed Bill, primarily for the reason that it would drive capital from New South Wales. Mr. E. C. Riddle, Governor of the Commonwealth Bank: The Bill will not affect the Commonwealth Bank, hut it will certainly drive money out of New South Wales to Victoria. People will not keep money on deposit with trading banks in New South Wales if they can obtain a better return in other States. Already a good deal of money has been transferred in anticipation of this Bill. Sir Alfred Meeks, chairman of the A.M.P. Society: The worst effect of the Bill will he to drive capital out of New South Wales. It would he a cruel blow to widows and others who are entirely dependent upon income from capital invested for their sup■port. I cannot say off-hand what effect it will have upon the A.M.P. Society, apart from the fact that it will he serious, as it will reduce income from the large amount invested in New South Wales securities, and from money loaned on mortgage to New South Wales policy-holders. It will reduce the surplus available for promises to policy-holders, notwithstanding that for 1929 the rate of interest realised on mean funds was £5 14s 4d per cent.

Mr. A. S. White, chairman of Whitefields, Ltd., and secretary of the Australian Cash Orders, Ltd.: Mr. Lang’s proposal to restrict interest rates on first mortgages to 5 per cent, and on second mortgages jto G per cent, is ridiculous. From time immemorial rates for second mortgages have exceeded first mortgage rates by from 1 to 4 per cent., according to the nature of the security and the extent of the risk. Of recent years first mortgage rates have ranged from Gi to 7 per cent., and second mortgage rates from 7 to 12 per cent. Money-lenders might overcome the obstacles created by the Rill by collecting a bonus on the amount loaned. For instance, a person requiring a loan of £IOO would receive a smaller amount, and pay the fixed interest rate on £IOO, the difference representing a bonus to (he lender. If means were found to prevent such practice, little money would be available for first mortgages, and much less for second mortgages, where the risk is infinitely greater.

Mr. Lang’s proposed legislation may mean diverting more money from private enterprise to Government securities, as most investors would prefer a small return from negotiable Government stock than a slightly larger yield from mortgages. The principal of a large moneylending Arm: To restrict money-lend-ers to a 5 per cent, margin, as proposed by Mr. Lang, would be disastrous to the business, 1 doubt if we could carry on. What business is there that runs on 5 per cent, profit? It would hardly cover working expenses and bad debts. Go far as we are concerned, there is that element of risk which is greatly in excess of that in other businesses.

centre of the dish, ancr pour the gravy round. * Eels Matelote—Skin the eels and allow two pounds of fish cut into pieces two inches loflg. Simmer foij half an hour with two cups of white stock, two cloves, a stalk of thyme, (wo bay leaves, a clove of garlic, 6 whole peppercorns, and pepper and salt, and (added after it has been cooking about ten minutes) a wineglass of claret. Drain the fish and keep the liquor. Fry three small onions, then add a tablespoonful of butter blended with the same quantity of flour, and the liquor from the fish. Stir until it thickens, then add the fish, cook for ten minutes more and serve. sk Baked Eels. —Skin the fish and cut into convenient pieces. Grease a fireproof dish and place in it the fish, sprinkling each layer with chopped sage, chopped parsley, a few bread-crumbs, lemon juice and dabs of butter. Add a blade of mace, cover with bread-crumbs and dabs of butter, and bake. * Boiled Eels.—Skin the fish, cut into convenient pieces and put in enough salted water to cover them. Add a tablespoonful of lemon juice and a bunch of parsley and simmer gently until the eels are cooked—about lit) to 45 minutes. Drain well and serve covered with parsley sauce made from some of the liquor in which the eels were cooked.