WHY PAY INTEREST?

New Zealand Listener, Volume 4, Issue 90, 14 March 1941, Page 15

WHY PAY INTEREST?

A NEW ECONOMIC PLAN FOR NEW ZEALAND. Issued by the Economic Retorm Association, Dunedin. OST of us when we borrow money, think that we must pay for it. But the anonymous author of this pamphlet thinks that we are donkeys. He has a simple plan for abolishing interest completely on all existing and future debts, mortgages, liabilities of every kind, and substituting for it a system of periodic instalments in repayment of capital at the same percentage rates. He suggests that from a given date, all debtors and mortgagors shall begin to repay at, say, five per cent, and thus completely escape their liability in 20 years. Creditors for the next 20 years will thus have time to adjust themselves to the loss of their capital, but old people, widows, and _helpless dependents will continue to receive thereafter, until they die off, an annuity equal to their original interest, but with a limit of £500 a year. It is necessary to read the pamphlet to find out where the money for these payments will come from. The writer admits that this plan cannot apply to our Overseas Debt, and also says quite frankly that "there can be no solution of the interest problem that is easy and pleasant for everyone." His plan, however, has the merit of being simple and easily understood, and it recognises (which some plans do not), the plight of those who depend on interest for their income. When the millennium comes, it will perhaps be considered seriously.