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Hokitika Guardian, 30 June 1931, Page 4

Thk Government evidently contemplates doing something in respect to an all round reduction of interest charges. For some time conferences have been in progress in regard to the matter with various lending and banking institutions, while the Chambers of Commerce have been bombarding the Government on the subject. Money values vary with trading conditions and the demand for the- credit. As we have seen, the exchange rate rises rapidly under certain conditions which are perhaps unfavourable to the country whence the money comes, and to meet the position, bankers make it more costly to send the money out of the country. Supply and demand therefore operates very plainly in monetary exchanges, and the price has to be gunged accordingly. In Australia a cut of 22) per cent. Iras been made on all internal interest charges, hut it is obvious that cannot he made to apply to external debts without the consent of tne louder. The Commonwealth made the cut as a means to meeting its obligations m a genuine effort to balance tho budget by spreading the equality of sacrifice over n wider range. Now Zealand is not in as difficult or as tight a position as Australia, but here the financial drift must be arrested, or the state of the Dominion may be little better. Tt would appear that a cut in interest rates will be suggested for New Zealand, probably on the voluntary basis, with the understanding in advance no doubt, that there will be mutual acceptance of the fall. The anneal report of the Bank of New Zealand referred to the matter, and it is likely the present negotiations were in mind at the time. At the same time, it is clear that Government and local body borrowing rates will require to ho cut down substantially to assist in meeting the general situation. The recent loan in London cost over six per cent,., and local body debentures are being offered at well up to six per cent, today. This price sets a standard for general rates, and the maximum must be vjeduced definitely if the general borrower is to have any relief in interest rates. Interest on deposits in banks will require to fall correspondingly so that the position is, perhaps, not as easy as it appears casuallv. Whatever relief can be given will be acceptable in these stringent times, and to that end, it is to be hoped a way out of the manv difficulties presenting themselves will be found.