RATES OF INTEREST

Dominion, Volume 13, Issue 275, 14 August 1920, Page 7

RATES OF INTEREST

Sir.-Mr. Massey states that the Government intends to continue doing everything within its power to keep the rate of interest down in New Zealand. The question o's: Has the Government's acr ! tion in this matter been a unmixed blessing ?'There are two sides to most' ; questions. We will admit that the Government and local- bodies have been enabl- \ ed to iloat their loans.at a comparative- ; ly' low rate of interest, 60 far so good. : On the other hand, the action of the Government bus been the principal cause of the great land gamble that we have i seen, and accounts for tho Government having to pay enormously enhanced values for all land purchased for returned soldiers. The increased price probably represents 6ome millions of money,. so 1 - what they have saved in one direction j they have lost in another. If the rote- -.; of interest had been allowed to tnke 'its ; natural course, the 6teady rise in- tho rato would have kept land at its pre- ! war value and stopped all speculation iu land. Again, Mr. Massey admits that the cost of living has risen' 60 per cent., ana is etill rising. ■ To meet this increase' all salaries, wngss, and pensions havo been raised in proportion. This aoplies' \ to-one section of the community" To another section, who have invested the savings of a lifetime on mortgage (this, j of course,' includes trust funds, on the i interest from which thousands of widows and orphans are- dependent), Mr. \ Massey says you shall have no increaso in tour income to meet the increased ! cost of living. I ask, is this fair? Is it just? Has Mr. Massey a right to' , Deualise one section of tho community . for the benefit of tho rest. Tho action of the Government in dealing with rents has been equally short sighted, and it remains to be seen what the full effect of its action in regard to the rates of interest is going to be. If the rate had gone up the price of land would 'have been steadied, and farmers, etc.. could have paid the higher rate of interest. Through the action of the Government the price of land lias risen, and the fun will begin when interest rises «s it must eventually do, Government or no Government—l am, eta., W. J. TENNENT.