BANKING AND FINANCE

Evening Post, Volume CVII, Issue 102, 4 May 1929, Page 12

BANKING AND FINANCE

NEW ZEALAND'S POSITION REVIEW BY HOX. W. P. REEVES (From "The Post's" Representative.) LONDON, 27th March. About forty leaders in the banking world contribute to a very comprehonsive international banking supplement to the "F: ianeial Times." The Hon. \V. Pember Kceves contributes four columns dealing with the trade and finance of New Zealand. "'From a banker's point of view," he writes, "the year has been fairly satisfactory, particularly so because it has, 1 think, justified the policy of the banks in limiting imports and encouraging deposita two years ago. Experience has shown more than once that in a producing country like New Zealand a sharp fall in the value of primary exports is nut followed as soon as it ought to be by a reduction either in the price or the volume of imports. The result is that merchants and retailers become overloaded and importers become embarrassed at the very time when producers for export see their profits cut down. The only thing for the banks to do is.to take the unpopular step of putting up the advance rate, and this step the New Zealand banks took after considerable hesitation. The result was expressed in the official figures for the year ended 31st'March, 1925, and tlwae arc emphasised by the figures for the calendar year just ended." Mr. Iteeves goes on to speak of the action of the Government in taking deposits of sums as high.as £5000 in the Government Savings Bank, and of the counter measures taken by the ordinary banks to do away with this competition. He gives figures regarding the export of dairy produce, wool, and fruit. TRADE WITH BRITAIN. "One aspect of the trade," he continues, "is not as comforting to English readers as it might be. The proportion of imports taken by the Dominion from Great Britain is barely 4S per cent., and does not increase. For the five years 1909-13 it averaged 60.09 per cent.; in 1922 it was 55.4G per cent., and has fince fallen to the present proportion. When one reflects that in 1922 the United Kingdom took 84.61 per cent, of New Zealand exports, and that in 1927 the proportion was still 76.4. it does not look as though New Zealand was making as full a return to the Mother Country as she might. It is true that in 1927 the imports into New Zealand of goods of British origin were valued at twenty-one and a half millions, and it is also true that a good deal of the produce sent to Great Britain is re-export-ed to other countries. Still, the disproportion I have pointed out exists, and it is in glaring contrast to the balance of New Zealand trade with the United States. In 1927 the Americans bought £2,681,000 worth from Now Zealand: but they sold in return £8,077,000."

| After dealing with public finances, Mr. Reeves concludes by a reference to private indebtedness. '"Mortgages amount to over .CH00.000,----000," he says, "and even if you allow for a certain amount of duplication, Ihe total is serious. The debt of the rural population must be approximately X. 140.000,000. About one-ninth may be to the banks, the rest ehiclly by way of mortgage. MONEY PLENTIFUL. "Money is plentiful and lending rate? not especially high for a colony. Money in appreciable amounts has lately been sent over to Australia because higher rates are obtainable there. The Auckland Private Savings Bank—a earSfully managed concern that handles several millions of money—reduced its mortgage rate from (i/i per cent, to 6 per cent. Iwo months ago, aud its deposit rate from 4-"i per cent, to 4Va per cent. Labour is abundant: the supply slightly exeee.-ls the demand. Wanes are not extravagantly high and industrial peace continues. It cannot be said that New Zealand, as a whole, is suffering from low prices, dear money, aud high co*ls of production. So far as she is suffering at all it is from the results of dear land, heavy rates and taxes, too miicli public borowing persisted in for many years, and, still more, from too much private debt."