INTEREST RATES.

Dominion, Volume 7, Issue 1957, 14 January 1914, Page 8

INTEREST RATES.

THE BANKS NOT TO BLAME. MR BEAUCHAMP'S OPINIONS. ON- SOME SUGGESTIONS MADE. A good deal lias been said and written of lato about tho rates being charged by tho banks for overdrafts and discounts; and in different quarters attempts have been made to fasten tho blamo for the present allegedly ' high rates on the Government, or on allegedly rapacious bank directorates. • "I think there is lio justification whatever for what is being said l about banking charges," .said Mr. Harold Beauch,amp,,.,cJiairnian of directors of the Bank'of Noiv Zealand, when invited by a Dominion reporter yesterday to discuss tho question. "In many cases banks aro advancing money by. , ! way of overdrafts at slightly lower rates than aro obtainable, by ordinary mortgagees. If you look carefully at tho hanking returns'just published, you .will find that the bank's in this Dominion havo been doing nioro than their duty towardsthe trading pubic. Further, if you considor tho rates charged by banks hero compared'. with those, ruling throughout Europe, yon-will find that during the period of stringency through' which w& have" been' passing' during the past twelve months, people in this country are actually receiving moro liberal treatment than'those in the Northern Hemisphere., ;' .". ."' .".'..' ...'. . "I observe that one or two newspaper correspondents aro suggesting that tho Government) should endeavour to influence the Bank of 2fe\v Zealand to charge 'lower rates than its competitors. I venture to think the Government will not go to that; length, as the Ministry must recognise,that.the pvico of money, as/.is the caso. with every other article in which people havo to deal, is regulatodf.by the inexorable law of supply and demand. ' ■ ' '

"To-day six per cent, is quite a common rato for overdrafts, provided the borrowers can offer first-class security. This is Tio higher than the rate charged by first-class mortgage companies, .who almost invariably insist on a margin of from 40 to 45 per.cent, in tho value cf their-securities. I have noticed some suggestions that the present rates ruling for money are in some way attributable to the action of the present Government. That, of course, is ridiculous, ivhcir ono knows that the rates, as I have already pointed out, ruling in this Dominion compare most favourably with those now obtaining-in Europe and elsewhere. I presume it is not, suggested that the Government of New Zealand can dominate the money markets of the world, which is the inference one might draw from some of the remarks I have Been in the Now Zealand papers. "In answer to the statement that rates in Australia- are lower than those ruling in New Zealand, I would mention that ono large lending institution in New Zealand, wliose head office is in Australia, has been instructed to ■transfer to Australia, any of its funds for which it cannot find immediate employment at 6 per cent., on tho ground that there is no difficulty in getting 6 per cent for gilt-edged securities in Australia. •■■.'■ •■•■'•'■;