INTEREST RATE

Nelson Evening Mail, Volume LXIII, 27 July 1929, Page 8

INTEREST RATE

HAS IT RISEN? lfNl>EiU / tjNITBI> REGIME STRONG DENIAL BY MINISTER i (By Telegraph) (From “The * Mail’s” Parliamentary Reporter) WELLINGTON, 26th July. A strong denial that the rate of interest has risen since the United Government came into office in December .Inst —n declaration made in the House of Representatives on Wednesday by Mr D. Jones (Mid-Canterbury)—was made last evening by the Minister of. Justice (the Hon. T. M. Wilford); vyfio declared that actually rates' had fallen. The member for Mid-Canterbury, said Mr Wilford, had declared' that since the present Government came into office the rate of interest had'risen and that moneylenders metaphorically thought that the Prime Minister was the best friend they had. Mr Wilford recalled that in 1891 the rate of interest on money lent in the Hutt district by private (enders varied from 10 to 13 per cent, on : first-class securities. The Prime Minister had then introduced the Advances to Settlers Act, which had made his name forever in this country. (United members: Hear, hear.) When he reduced the rate of interest to borrowers from 8, 9 and 10 per cent., which private capitalist's were charging when they were not faced with competition, naturally Sir Joseph 'Ward had every capitalist institution at his throat, but he won

out. ' I \ _ „ Mr W. E. Parry (Auckland Central): “State enterprise.” Mr Wilford said Sir Joseph had made the Advances Department a medium by which the whole rate of interest for lending on freehold securities had to drop,, otherwise the lenders could And no borrowers. The result was that right: throughout New Zealand, following the creation of the Department, there was a reduction in the rate of interest on mortgages.. Mr Wilford said ho well remembered the change. Ho went on to state that the rate of interest on borrowed money on mortgages had fallen since the present Prime / Minister came into office, on 10th December last-, A voice: “No.” Mr Wilford : “There is no doubt about it.” He said that the ruling rate of. interest on first-class securities, as charged by trust estates, had dropped fiom 7 per cent, to per cent, and even 6 per cent, since the beginning of this year. The bank return showed that there was no depleted local market ; they only showed that the banks were hoarding money. The trouble was that the rate in Australia was' higher than it was in New Zealand, and as capital had no conscience it; naturally went- to the country where a greater amount -'f interest could he earned. Mr F; Langstone (Waimarino): “Is it a fact that the banks sent £400,01)0 in gold to Australia ?” INFLATED LAND VALUES The Minister said he did not know. The real cause of high rates of interest to farmers and for broad acre investments Was very plain. The unpopularity of bi-bad acre investments for some time past had been due undoubtedly to the inflated land values brought about during the Reform Administration. 1 hat caused moneylenders to burn their fingers, with' the result that Capital Was chary to Tend money on farm securities, but there “ was no difficulty in getting money at a reasonable rate of interest tc. erect large buildings in the main cities. The highly inflated price of lana brought about largely by the policy of the Reform Party had held up investments and created a higher interest rate. Since taking office the present Minister of Finance had reduced The'fate of interest on Government issues-cf slot k from per cent, to per cent., hotwithstanding that the _ rate of percent. had been maintained by the llofotm administration. Local bodies were ccrriing into line and this also must be placed at the credit of the Prime Minister. ' Mr Wilford l declared that the Advance; to Settlers Department had teen starved for funds when the present Government came into office, and he referred to 83 cases in which applicants in one portion of his district had been informel that there was” possibility of their getting their money for .it le.rsb eighteen months. The Prime Minister had been obliged to get his money where lis could in order to meet the demands that were being made for it, arid although it carried a higher rate of interest than before, people were grateful for it.-