SHARES & MINING
Observer, Rōrahi XXXV, Putanga 8, 31 Whiringa-ā-nuku 1914, Page 20
SHARES & MINING
IT is cheering to note the steady improvement that is taking place in the financial conditions in London. When war was declared, or rather just before the outbreak of hostilitii, the Bank of England was rustied for gold, and a prolonged bank holiday was mdulged in to enable the authorities to review the position, and to take the necessary steps for meeting the crisis. The Bank Act was suspended, and the British Government issued £1 ana 10s notes, and immediately a change came over the situation. Wheri the Government guaranteed the Banls of England against loss in discounting pre moratorium bills _ a further wise step was taken to aid finance, trade and commerce. The suspension' of the Bank Act immediately checked' the outflow of gold, and brought about a sharp decline in the discount rate. The discounting of the pre moratorium bills has largely increased the readily available credit, and international trade is working as smoothly as it is possible to work in war time. The Bank of
England has been able to steadily add to reserve of gold, and the total of £59,498,000 held last week is about the largest amount ever held oy the bank. The accumulation of idle credit has enabled the British Government to borrow on very favourable terms. * * * The war is costing the belligerents a large amount of money. It has cost England five and a-half nnl: lions per week for the past ten weeks, and has since risen to over eight millions a week. The costs to Germany, France and Russia must aggregate a formidable sum each week in all. The belligerents must borrow and borrow within their own territories. Of course, the finances of the United States are free to lend to any of the fighting nations, but oiernany and Aut-tna have little hope of getting money there. The economic aspect 01 the is very important, lor it will help to determine its duration. Germany is already finding it very difficult to borrow within her own dominions, lhe loan asked some weeks ago, totalling £100,000,000 was not a success. It was asked at 7 per cent., and neutrals were forced to contribute. Debts due by German subjects to neutrals and to the enemy had to be paid to the State, or rather the amount due had to be invested in the loan. Germany made a conipuisorv levy on neutrals, and the clockmakers of Switzerland have complained to the Federal Council on this very matter, claiming that it is a violation of Swiss neutrality, lhe foan issued by the German Empire is to be supplemented by another to be issued by the Prussian Government,
the latter amount being £75,000,000. The Prussians will have quite as much if not more difficulty in securing this money as had the Imperial German Government. "■ • • • The case stands differently with the British. His Majesty's Government has been issuing Treasury bills about once a-fortnight. The last, issued last week, was for ,lo;,UUU,--000, and the average rate of interest was £3 15s per centum, as against the German 5 per cent, besides a heavy discount on the price of the war loan, it is obvious that with each fresh loan German credit will suffer, and the people will be unable to find the money. German trade has ceased to be a helpful tactor, all that Germany is getting now being foodstuffs through neutral countries, for which she is paying very stiff prices. Germany and Austria cannot carry on the war tor any great length of time without money. Scarcely any complaint canbe made with respect to the conditions in New Zealand, On the contrary there ie much cause for cheerfulness and optimism. Trade in the Dominion ■ should be good and until the end of the year there should be about the average expenditure. The Government expenditure will be maintained at very much the normal level and there is the election to stimulate the expenditure, and after that will come the holiday expenditure, matter of fact, retailers are domg well now, and if the truth were known many of them are showing better re-
sults than at the corresponding date last year. One local soft goods retailer frankly admits that a recent Saturday was the record in the history of his business. The people have got over the first funk of the war. They have recovered their nerves and their sanity, and they can see that the Allies must prove victorious. Furthermore, the war is not inimical to the interest of New Zealand, so the people are earning and spending money much in the usual way. m m We have every reason for believing that the coming Christmas will show trade to be up to the level of past years. The drapery and general importing company, familiarly known as the D.1.C., has had a very good year's trading, the profit amounting to £24,250, which, with £11,339 brought forward, made* a valuable £35,589, which has been' allocated as under-.—Preference dividend 6 per cent., £7500; ordinary dividend, 7 per cent., £8145; reserve fund, £5874; carried forward, £14,070; total, £35,589 Of + the amount carried forward a deduction is to be made to pay ,a bonus of A per cent, to shareholders on their purchases. The reserve* 'fund now stands at £50,000. i • » The wool market is booming. In spite of the Continental _t rade A _ he demands of the British War Ofb.ce and of the French, Russians, and Belgians, which at the moment are very pronounced, Have been sufficient to. raise values. Of course, it must be admitted that there is a; scarcity of the raw material at the moment, but when the bulk of, the
new clip is on the market prices will steady. There will probably be a slight fall, still leaving the staple at a highy payable level. The continuance of dry weather will lead to early shearing, so that some part of the new clip should reach the terminal market before the end of the year. Dairy produce is- :a_o commanding good figures, and butter and cheese should command good prices for a long time to come. The Continental supply will be checked for a considerable period, even after the war is at an end, for the reason that time will be required for the Continental farmers to resume operations. Dairy stock is bound to! be impoverished and its numbers greatly reduced. Cheese must command a good buying price for quite a while. Wheat is another product that will pay the farmers, for Europe will need to import very large quantities for many months to come. Frozen meat is selling well, and.here again values are bound to be maintained. When the matter is looked into one cannot help being optimistic. .