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Hokitika Guardian, 14 July 1920, Page 2

In the last loan issued by illp British Government in tho form of bopds the rate of interest will, for n period of five years, he liable to fluctuation. The issue rate, o per cent, is taken as the minimum rate, but should interest paid on temporary loans /be higher than the issue rate on tho bonds then the rate paid on the bonds automatically increases. The “Sydney Morning Herald” thinks the scheme is well worth while discussion by Australian Governments, and eonsidero.tjo*! might- he given to the question whether it jyould not- lie advisable to offer, when making local loans .something on the same lines. It would encourage investment, since investors would know that for a certain period of the loan they would receive for their money, up to a limit, any higher rate of interest, which the market might oiler. To illustrate the proposal it is well to recapitulate the scheme of the British Treasury. Interest on the British bonds is paid halfyearly, on May Ist; and November Ist., and when the average rate of discount on Treasury bills for the six months preceding those dates exceeds 5£ per cent., hut is under 6j per cent., the 51 per cent, interest on .the bonds will bo supplemented by an additional 1 per cent, per annum, and when Hie Treasury bill rate is 61 per cent, or more, the 5 per cent, fixed interest will be supplemented by additional interest at tho rate of 2 per cent, per annum. The maximum rate of interest on the bonds is thus 7 per cent.

In an article on the price of money, tho Wellington “Evening Post” said a day or two ago:—-“The movement of tho banks ib raising the overdraft rate from 5) to 6 per cent, is in line with the money market elsewhere. Tt- will have tho effect of restricting speculation.-So far as can bo ascertained, the banks’ fixed deposit rates are unchanged at 3.1 per cent, for twelve months, and building societies’ 41 per cent, for tli« same period. The only advance in deposit dates was that made some months ago by the Government on "Post Office Savings Bank rates, advanced from 3jJ per cent, to 4 per cent, on deposits up to £3(X). The Commonwealth Bank has just raised its rate on balances up to and including £IOOO from 3 per cent, to | 31 per cent. Some idea of the price of I money to local bodies on the London market may ho gathered from the follow ing recent issues:—London County Council loan of £7,(XX),(KM), issued at £95 ,interest rate 53 per cent. Birming ham Corporation loan of £3,000,0(X> issued at £9B, interest 6 per cent. ; Herefordshire C-ounty loan of £2,000,(K) Oissued at £9B, interest 6 per cent. 85 per cent, left with underwriters.”