The Wanganui Chronicle TUESDAY, DECEMBER 22, 1925. CAPITAL AND INTEREST

Wanganui Chronicle, Volume LXXXII, Issue 19478, 22 December 1925, Page 8

The Wanganui Chronicle TUESDAY, DECEMBER 22, 1925. CAPITAL AND INTEREST

There is provervially much virtue in second thoughts. The Government having announced an increase in the rate of interest to be charged on loans from the State Advances Department, it seemed last Tuesday to the local Opposition organ that the Government was “doing its best to defeat the excellent intentions which inspired the Liberals to establish the Department.” Moreover, the critic declared that “it is the duty of the Government to give a full explanation of its action, which will probably cause widespread comment and may lead to an all round increase in lending rates.” We have not noticed that the Government has given any fresh explanation since those words were published. There has been a certain amount of comment, but all that we have seen has been of a favourable nature, the Government’s action being everywhere regarded as entirely justified. These comments, and perhaps a more leisurely study of the matter, have had an admirable effect on the Opposition critic. Within a week it has so complete.lv changed its opinion as to be able to say, without even a suggestion of reservation, that “the Government, in raising the rates for loans obtained from the Advances Department, is taking the proper course in this matter.” We really must congratulate the critical journal on its belated perspicacity. The Government has had to raise its lending rates because the people from whom it borrows are charging more than they did. Money is by no means plentiful in London, and the general opinion in financial circles is that it will become dearer than it is now. Both the Government of New Zealand and local bodies must expect to pay higher rates, and since they must look to Dominion sources to fill their requirements, it is evident that private borrowers will find it increasingly difficult to obtain finance. The Advances Department’s activities will therefore be more welcome than ever, even at the increased charges. If the state of the money market should put a check upon Government and local body borrowing so much the better, provided the result were to free captkal for diversion to the primary industries. Unquestionably farmers are experiencing difficulty in obtaining the funds they require for capital expenditure upon developmental work, which is an urgent need in the Dominion. Not only individuals but the State also would be materially benefited by an increase in the volume of production, which could be obtained through better farming of the land that is already in occupation and the settlement of new country.