INTEREST RATES

Hokitika Guardian, 1 July 1931, Page 3

INTEREST RATES

STATEMENT BY BANKER. j WELLINGTON, June 29. “Jhe next move for reduction of interest rates rests with the Government, ' said Air J. T. Grose, general manager ot the National Bank oi Ntu Zealand, to-day. ‘'The representatives’ of the banks recently conferred with the 1 Prime -Alinisier (the lit. Hon. U. W. Forbes) at his request, and informed h m of the poistion," said Air Grose. “Jf the Government will reduce the rates of interest which it is offering tor Government securities the banks will be able to take act.oil. The present rates are made necessary by outside compe ition. When the Government moved to increase interest rates four years ago the banks protested, but had to follow suit. And while it may be true that over a year ago, when the decision was made to raise the rate for the sale of securities over the counter, this, step for higher rates was made necessary because of the fact that money was leaving the country for Australian investment ; in the past twelve months money has been coming from .Australia for investment in the Dominion.”

The hanks were forced to meet competition, stated Air Grose, and the fact that the Government issued securities at higher rates, that the Post Office Savings Banks paid interest on large deposits as well as small ones, and that the Public Trustee paid interest for moneys, conspired to make the hanks offer higher rates to investors and therefore lo force them to mark up their lending charges. It will he remembered that in August of last year the Hon. W. Downie Stewart declared that when the Government increased the rate offered lo 5j- per cent, the local bodies had protested that they were getting money freely at 5\ per cent,, and that deposits had been freely withdrawn from the banks for investments with the State. The next effect (said Afr Stewart) was that the hanks had been forced to put up their overdraft, rate in order to pay increased depos't rates and so tlie whole community had to hear the. charge to enable the Government t,o obtain the funds it required.