APPEAL TO BANKS TO REDUCE RATE BELOW 7 PER CENT.

Star (Christchurch), Issue 18453, 2 May 1928, Page 1

APPEAL TO BANKS TO REDUCE RATE BELOW 7 PER CENT.

MR W. MACHIN SAYS POSITION IS NOW ENTIRELY CHANGED. Mr W. Machjn, as ex-president of the Associated Chambers of Commerce of New Zealand, has sent the following “ open letter ” to the chairman of the Associated Banks:—Sir, —I am venturing to write this letter to you as it is a year since, as president of the Associated Chambers of Commerce of New Zealand. I was called upon to express publicly an opinion with regard to the action of the banks in increasing the overdraft rate by 10s per cent, and on the position as it then existed I could not do other than approve the action of the banks. This letter is published (although 1 have given you private notice of it) because the former one was made public, and I am now asked by a number of business people to say that we think the present conditions justify the increase being removed, and we respectfully ask you and your colleagues to consider a reduction in the rate. You are more aware than any of us of the most remarkable

alteration in the I position of bank de I posits and advances I which has recently I occurred. On March I 31, 1927, there was I a grave excess of I over five million I pounds in bank adI varices over depoI sits, but oh March I 31. 1928, this had I actually become an s excess of deposits over advances of no less than £4,000,000, a most

satisfactory recovery of no less than nine millions of money. I believe that the amount of deposits of £50,000,000 is now greater than it has ever been in the Dominion (except for one extraordinary year), and that advances are below the average for the past five or six years. It is common knowledge that the year’s satisfactory figures are largely due to the fact that our income from exports is about nine millions higher than it was last year, and we have good reasons for being doubtfui whether the future will give us so large an annual income unless we can maintain it by production rather by reliance on this year’s prices, even although meat and grain prices are still rising, and therefore I am not resting my argument solely on the excellent recovery of our trade balance. What will be most satisfactory to you and the banks, and whaUmust be one of the" justifications for the action of a year ago, is the most satisfactory drop of nearly £4,000,000 in our imports this last year. A year ago I said that it seemed to me that nothing had impressed the public so much on the question of need for economy as the action of the banks in raising the interest rate, and I am still of that opinion. Had, however, the prices of our exports not risen, this resultant economy must have been gratifying, and no doubt we should now' be looking forward to a reduction in the bank rate of interest in, say, a year’s time; but, as the gods have also helped those who have helped themselves, may we not venture to hope that the banks will take their proper place amongst the gods, and be equally generous and helpful ? A reduction of this high minimum rate of 7 per cent on advances at the present time would be a great encouragement to all who have to work on borrowed money.. It would give more freedom and buoyancy to business, and would, I believe, reduce unemployment. In the hope that you will accept as my apology for addressing you publicly the general importance to the public and urgency of this question.