The Guardian And Evening Star, with which is incorporated the West Coast Tunes THURSDAY, MARCH 2, 1933. DEBTS AND INTEREST BURDEN.

Hokitika Guardian, 2 March 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Tunes THURSDAY, MARCH 2, 1933. DEBTS AND INTEREST BURDEN.

In a payer issued recently by the Canterbury Chamber of Commerce, some interesting facts relating to the interest burden carried by the Government and the people are given. The debt of the country and the people is first detailed. Teat reaches to the enormous total of 564 million pounds, made up as follows: —Gross State debt, 2»2 millions; gross local body, 72 millions; 'return 'tf> land mortgages, 159 millions; hank advances 51 millions. This huge debt is the burden of a population of about one million and a half, and the total national income is considered as probably now below 100 million pounds; The interest burden would not be less than 25 millions, and that in relation to earning power, suggests a very difficult 'situation. The mortgage value of securities hae been greatly shaken, by the fall in values of commodities produced, and that in turn has affected general property values. That decline means that the earning power of the ,secured assets has diminished greatly,, and the securities are not capable of giving a return equal to that required. The average experience is that the general con.ditioms o.f trade and intercourse in the Dominion is not meeting the requirements of the position. Farm securities in. particular are not producing whiat is required in value to meet the charges upon them. The farm indebtedness is very substantial. In the period of so-called “cheap money”, speculation was rife and even reckless. The margin between the value of the security and.the sum loaned was t educed mostly to a. nominal sum, and at the first turn of the tide, such securities became a burden. The return from the land has .fallen almost abnormally. It is the chief source of the national wealth, and the effect of tho drop is, naturally, far reaching. Only palliatives have been attempted so far to meet the position. Principal has been reduced and interest remitted in some cases, but it is not general enough to give material • relief to the national situation. Interest has been deferred,..and remains an .accumulating debt and a growing burden, making it more difficult than ever for the securities to clear the debt by earning power. The question of the reduction of interest as affecting market rates is suggested, but that manifestly, can be only for the future. It is felt that rates should be reduced to five per cent. The cessation of. borrowing by the Government is suggested as a means to keep down rates, and if borrowing is necessary, then there should be a strict limitation. There should be a. lessening of demand, and that will increase the supply, which while plentiful will accept lower rates- of interest. There is also the suggestion that there should he guarantees against further interference with contracts, in order that confidence in the security of investments may be restored. All this is quite admirable, but. how can further Governments be controlled by guarantees they have not given! And the law of supply and demand is inexorable. If the demand is not here, may not the money be' transferred to another country where there is a more lucrative demand ? The whole subject is one of complex difficulty and will not be possible of elucidation till normal trade levels are reached again, and business may run as usual. But the tide must be stemmed meantime.