INTEREST CUT.

Press, Volume LXVIII, Issue 20490, 8 March 1932, Page 10

INTEREST CUT.

AUDIT DEPARTMENT'S ORDER. POSITION OF PRIVATE INVESTORS. A favourable view of the Audit Ltepartment's recent action in connexion with the reduction of interest payable m New South Wales was expressed by Mr W. Machin (president of the Associated Chambers of Commerce) in an interview with The Pkess yesterday. ( The Audit Department has intiinateti to local bodies that interest to be pa J a to New South Wales holders ol deueni tires must be reduced by 4s 6d in the t. or to a rate of not less than 5 perj runt., because of the New douttt Males' legislation imposing a compulsory reuueium of a corresponding amount U1 all interest payments made in that state. , A* was stated in Tim Pitsss yester-: day, many of the Christcliurch Local tiodies expressed amazement tiiat the .Now Soutli Wales legislation could be; capable ot enforcement- in the Dominion borne questioned the point, described the Audit Department's intimation as extraordinary, and found the principle of New Zealand ratepayers obtaining relief at the expense «1" New South Wales debenture holders as difficult to defend "1 don't seriously disagree with the Auditor-General in intimating that ihe interest must be reduced, in accordance with Australian law," said .Mr Machin. "When New Zealand does the same thing—which I hope will not be done by law, but voluntarily —and reduces the rates of interest, above a certain figure, by an amount similar to the New South Wales reduction, then the same thing will happen in Australia. The Australian Auditor-General will probably make the -ame decision, and the position will be evened up. "It is obvious that if New South Wales cannot afford to pay this interest to her own nationals, when the time comes for her nationals to receive I lie same amount of interest from New Zealand, they ought to take the same proportion of the deduction. •'lt is quite probable that in all these newer countries the rates of interest will have to be scaled down generally, faster than they will in the older countries, such as Great Britain," continued Mr Machin. "This is part of our economic readjustment, which is imperatively necessary, and the more general it becomes the better it win be for everybody, because if some people stick out for one hundred per cent, of their rights, others will have to go short." Private Investors. Meanwhile it is being taken for granted that private holders in. New Zealand of New South Wales securities, nuch as debentures, mortgages, or preferenoe shares, will fin<| their interest reduced by 221 per cent.,- the amount of the general order; but from enquiries made in interested quarters it v> ae indicated that few people are likely to be thus affected. A City banker who was questioned stated that a reduction of the interest paid to New Zealanders holding New South Wales debentures would come as . a matter of course, although ne had so far heard of no case in which the reduction had become effective or had been notified. In past years, it was pointed out, it had been the practice of some New Zealand firms- to create reserves, varying in amount, in New South Wales, but it had been found necessary, by >ome of them to call upon, these reserves consequent on- the necessity of realising on assets during.the depression. The high exchange rates which had been ruling would also have had force effect on the-flow of money between the Stateand the Dominion. Another hankin/r official stated that he did not think that many New Zealanders had invested in New South Wales securities. Boundfcy Law, A prominent City stock-broker pointed out that any New Zealand investor holding debentures, mortgages, ,or preference shares '= in New South Wales is bo mid by law to accept the induction of -interest, because legislation forbids the paying out of more than the legal'rate of- : interest. " This had been enforced to avoid any private agreement on interest payment. He.doubted .if there were many private investors in the Pominion holding affected New South Wales securities. The ordinary shares, with the exception, of debenture issues, wert not subject to tho exaction of 22J per cent., "it the thousands of ; New Zealanders * who held shares in companies operating extensively in New South Wales would find tho value of their shares depreciate through the loss' of interest which these firms rould suffer on their largo loans to farmers and others in the Hnte. Many of the firms, particularly trie stock and station firms, held extensive mortgages on which the reduction would operate. FIJIAN FRUIT. SEEKING NEW MARKETS, An arrival in Christcihurch yesterday from Fiji • was Mr A. C. Barnes, Director of Agriculture, Fiji, who disembarked from the motor-ship Port !2- a if kyttelton yesterday morning. ~ Mr_Barnes told a representative of Pwbss that he had come to New Zealand to seek new markets for the fnnt products, of Fiji, and to <w . r to secure a better distribution of that, particularly in the South Island. Tho Port Alma had brought to Lyttelton the 2800 ca&es of bananas as an experimental shipment, and it was hoped that this would be the first of regular shipments to the South Island, tp till the present jbotb the growers and the merchants in the South Island had been up against it through the shipments being landed at. Auckland. It was t.oped to secure better distrihutwn of Fijian bananas. The great difficulty at present was. that when shipments clashed witb~those : from other islands the prices fell. A better distribution of, tlie shipments would obviate this. The growers bad been losing heavily for tho past two months. The quantity of fruit forwarded had been greater, but in at least two instances the growers had lost up to - a case. In. 1929 the export of bananas was over 200,000 cases; but in 1930, owing to Hoods and storms which damaged the plantations, the export dropped to 84.030 casch. In 1931 the recovery had won such that 97.000 cases exported. The recovery towards the end of last year was remarkable. In December alone 20,000 cases had been sent to New Zealand, and from the beginning of this year to date 43,000 cases.. The whole of the fruit, with tho' exception of the shipment brought by the Fort, Alma, had been landed at Auckland..