THE BANK RATE.

Taranaki Daily News, 26 April 1922, Page 4

THE BANK RATE.

At the meeting of representatives of dairy factory companies at Hawera on Monday, a motion was passed protesting against the continuance of the present high bank rate of interest, and asking the Associated Banks to consider its reduction. The protest is timely, and it is to be hoped it will be supported throughout the length and breadth of the Dominion. The present high bank rate cannot be justified, and is. perhaps, one of the greatest factors in connection with the lack of enterprise and unemployment now in evidence in the Dominion. In normal times the difference between the British bank rate and the New Zealand rate was rarely more than a half per cent. To-day it is from 3 to 3ft per cent., the local banks charging no less than 7 to 7-ft per cent, for ordinary business accommodation, supported by gilt-edged securities, whilst the British rate is down to 4 per cent. It may be argued that the class of business is different in England, where loans are short dated, against uncertain periods here, but in Australia, it may be pointed out in reply, the bank rate has never risen beyond 6 per cent. In Australia there is a Commonwealth Bank. In New Zealand the State is certainly a partner in the Bank of New Zealand, but so far as the interest rates are concerned it does not seem to have any influence whatever. Seven per cent, and moye is pure exaction. Capital loaned on first-class security is not entitled to such a rate. The maintenance of the usurious rate fGr so long reflects no credit upon the banks, which, instead of helping the country in its hour of need and playing their part—and it ought to have been no unimportant part—in reconstruction, are taking advantage of the prevailing conditions and the necessities of the people to enrich their own pockets. The conduct of the banks during the present hard times will not soon be forgotten by the public, and if we mistake not, afford advocates and supporters of the establishment of a State Bank or State Agricultural Bank the strongest of arguments. Banks are accorded many privileges in New Zealand, and they should recognise they also have responsibilities, particularly in times like the present, when everyone else is being called upon to make sacrifices.