THE COST OF MONEY

Dominion, Volume 14, Issue 56, 30 November 1920, Page 8

THE COST OF MONEY

PRICES AND PRODUCTS

COMMERCIAL MEN'S VIEWPOINT

Statements that the present low fixed rates of interest in tho Dominion wero leading to the virtual expulsion of capital from the country led to considerable discussion at the quarterly meeting of the Wellington Chamber of Commerce yesterday. A now 1 aspect of the loan to he raised for tho settlement of discharged soldiers was taken into account by Mr. J. T. Martin, who asked what effect, the loan would have on the country. "The fixation of low interost rates is simply driving capital from the country," ho added. Mr. W. Stuart Wilson said that, in his opinion, the Government and the banks in New Zealand had performed yeoman service in keeping interest rates down. If interest rates were raised before such action was absolutely necessary, it would be found difficult to finance industries i and if monoy were found to be leaving tho country the Government and the banks could soon rectify matters. You can't send money away as you used to," he maintained. There was a chorus of "Why?" "Cant vou?" from other members, and ono of the committee affirmed: "You can, except in nnusual cases." Mr. A. F. Roberts said that in the case of ono company alone, hundreds of thousands of pounds had left New Zealand. Re deprecated any system whereby cheap money could be obtained, adding: "If a man had to pay inore for borrowed money he would not be so eager to borrow and to settle on high-priced land." His opinion was that tho policy of low interest was merely driving away money fromthe Dominion, which he thought would sooner or later regret the course it was ft< T?o ir president of the chamber (Mr. M. A. Carr) considered that the country was limiting profits and: interest rates, while at the same time refusing to limit taxation. Under present conditions both money aiid settlers would be robbed of any incentive to stay in the country. . Cheap money was not an advantage, but. meant dear goods. Dear money (i.e., higher interest rates) would mean cheap goods, and if money were harder to obtain, the highprices question would rot be sucli a momentous one. In reply to Mr. Can", Mr. Wilson said that commercial men wero of opinion that 'when the price of money went up, the price of commodities fell, which led to a fall in land values. The latter situation led to ocute financial depression and sometimes ended in panic.