DOMINION FINANCE

Waikato Independent, Volume XXIX, Issue 3101, 22 June 1929, Page 5

DOMINION FINANCE

RATES OF INTEREST. PLENTY OF MONEY AVAILABLE. In the directors’ report to tho annual meeting of tho Bank of New Zealand yesterday, the Chairman, in touching on rates of interest and money available for loan on mortgage, said: —

In July last rates of interest on fixed deposits for one and two years were reduced by l per cent, and the rate on best overdrawn accounts was also reduced by \ per cent.

It is, of course, always a simple matter • to reduce interest rates, and so lessen deposits, but it was not so long ago that Banks in New Zealand were compelled to raise rates in order to retain and augment their deposits, and, notwithstanding the present excess, it Would be-"inadvisable to make any alteration in the rates now existing. The majority ef people are lenders, hot borrowers, and care must be taken that deposit rates are not reduced to a figure that would divert money in large quantities to other countries for investment where, at" the present time, a better rate on equally good security is obtainable;- money can be easily and inexpensively transferred from one country to another.

The Bank of England, consequent on conditions prevailing on the New York money market, found it necessary to increase its discount rate by 1 per cent, on February 7th last. As our Bank has a large amount of funds invested in British Treasury bills and other short-dated investments in London, this? increase in rates has benefited us materially, • The rise referred to, whi\e benefiting lenders, had an opposite effect on borrowers; consequently, for the first time in history, New Zealand local bodies are finding it cheaper to raise ..their loans in the Dominion than abroad. Recently a number of 5J per cent, issues have been placed on this market a.t par with little or no flotation expenses.

The supply of money available for loan .on mortgage against good security is greater than the demand. The ruling rate for such loans is 6 per cent., though occasionally a little less is accepted for particularly choice business. It is pleasing to note that Sir Joseph Ward, as Prime Minister and Minister of Finance, has made it clear that it is the intention of tlic Government to check Government. interference with business carried on by private enterprise. It is to bo hoped also that, in the readjustment of taxation he foreshadows, Government and municipal trading- concerns will be required to pay rates and taxes on a basis similar to those paid by other traders and financial institutions in the community.

If these two matters are rectified, a long-standing grievance will be removed, the burden of taxation will be more equitably distributed, a greater confidence will be engendered, and an impetus will be given to the industrial life of the country.