New Zealand Assails High Loan Interest

Sun (Auckland), Volume II, Issue 387, 22 June 1928, Page 12

New Zealand Assails High Loan Interest

DEFINITE J.OWERING (Special to THE SUN) PALMERSTON N., To-day. By raising £5,000,000 on the London financial market recently, the New Zealand Government started a definite tendency to lower the rate of interest on big borrowing,” said the Prime Minister in his address here. The eagerness with which financiers accepted the Dominion’s credit was illustrated by Mr. Coates, who revealed that £28,000,000 had been offered at 4j\ per cent., when £5,000,000 was sought at J # ndon. Politicians and financial critics had asked frequently, “Why did not the Government reduce the bank-rate?” But Mr. Coates warned his big audience that th© conduct of national finance was commercial undertaking, and the banks profit-making .institutions It would be a bad day for New Zealand, he thought, when the country adopted the principle of giving power to the Government to regulate commercial concerns, particularly banking. Interference with finance was particularly undesirable now, because the Dominion's credit proved to be the highest ever. On tho invitation of the London market recently for £5,000,000, £28,000,000 had been offered at 45 per cent. “It is not a question of whether we net £4 19s or £4 18s 6d.” he said. “The real point is that the ruling rate of 5 per cent, for loans has been broken, and wo have secured our first loan for many years at 45 per cent. So far as the loan for public works is concerned, wo have to pay £4 18s 6d, but the renewal loan will work out between £4 15s fid and £4 16s. This indicates that the interest rates on our future loans will have a downward tendency. You, as farmers, commercial men, and citizens, recognise how important it is to have the interest rate as low as possible if we wish to develop, and this denotes our high credit throughout the world.”