THE GOVERNMENT AND THE RATE OF INTEREST.

Star (Christchurch), Issue 5667, 11 September 1896, Page 5 (Supplement)

THE GOVERNMENT AND THE RATE OF INTEREST.

Nothing seems to grate upon the feelings of our Conservative friends so much as the cheap money policy of the present Government, which has proved such a boon to the farming community and is about to be extended to other sections of the community. A random utterance by a Melbourne journal has been eagerly seized upon by one of the Opposition organs and made the text for a repetition of the wild assertion that the Government Advances to Settlers Act has had no effect whatever upon the local rate of interest. It is, of course, easy enough to write with an air of authority about the law of supply and demand, and to show that money is considerably cheaper all over the world to-day than it was three or four years ago ; but the New Zealand borrower has not always participated in the advantages of a declining market. No one will maintain, for instance, that when he was paying 10 or 15 per cent for advances on undoubted security that the charge was fixed by the rate prevailing in London. Nor must it be supposed that exorbitant rates of interest are even now entirely unknown. A parliamentary paper just issued on the motion of the Hon W. J. Steward throws a good deal of instructive light upon this important subject. It gives details of all moneys (excluding those advanced under the Government cheap money scheme) invested on mortgage in New Zealand during the year ended March 31 last, with the rates of interest agreed to be paid. This shows that the ruling rate of interest for advances on mortgage in this colony is still higher than the rate charged by the Government office. Of the total advanced, £5,573,790, no less a sum than £1,359,021 was lent at 6 per cent, while there was a further sum of £732,764 at 5i per cent, and one of £110,600 at 5f per cent. Roughly, there were about two millions sterling lent at from 6£ to 8 per cent. Only about one million was advanced at 5 per cent or under, and it is very doubtful if that sum would have been so large but for the effect of the State scheme. There is one useful purpose served by these persistent efforts of the Opposition to decry the labours of the Liberal Government in the direction of lowering the rates of interest on mortage loans. By this means the public are enabled to see through the real aims of the Conservative Party with its freetrade in everything, including the right to levy extortionate rates of interest by taking advantage of the necessities of borrowers. The return now before us shows that money is still being advanced on mortgage at such exces-

sive rateß as 20, 40 and even 62 per cent. It is safe to predict that after a few more years' operation of the Advances to Settlers Act these rates will no longer be paid in New Zealand.