THE MONEY MARKET.

Auckland Star, Volume XXXV, Issue 250, 19 October 1904, Page 5

THE MONEY MARKET.

VIEWS OF FINANCIERS. A TEMPORARY TIGHTNESS. (By Telegraph.—Own Correspoiiilout.) CHRISTCHURCH. this day. A gentleman who speaks with a long experience in a responsible position says here is no doubt that the present tigMlcss of the money market has been brought about mainly by the big tramway loans. He points out that in the larger centres of population heavy sums iave been raised for tramway purposes. These sums are not directly remunerative—that is to say, they are devoted to ncreasing tho facilities for traffic, and lo not yield a direct return such as ie obtained by farmers when they spend money on their properties and reap a high interest with their crops. The action of the Government in calling in its short-dated loans has undoubtedly been another factor in bringing about tb» position. The resources of the colony are limited, and heavy drains made upon the sums available in the money market must •lave a marked effect such as is being shown now. It is net anticipated, howover, that the present tightness will last for any length of time. It. is regarded merely as a temporary thing, which will soon pass away. The colony's income from its wool is double now what it was lour years ago. The money for this year's .vool is beginning to come in even now; it will continue to do so during November. December, January and February, md, when it is all in there will be abouc i:2 r OOO,OOO or £3,000.000 more money iv the colony. That alone will relieve the -ension, and it will then be found that the financial position will resume its normal condition. The opinion of another Christchurch financier is that the present position cannot last for long. He also thinks that it has been caused mainly by the borrowing of local bodies, though he-says that the tightness has been accentuated by tho Government's action, and also by the condition of affairs in Australia, which, he says, is much more serious than people in New Zealand realise. The banks there have been calling in money, and their ac tion has had a decided effect on New Zealand funds. Five per cent, can be obtained now for invested money, and he believes that the market is hard at that price, with a tendency to rise. Not long ago an institution in Christchurch lent a large sum running into thousands at 5 per cent., and renewals are now being granted at 54 per cent. A third financier who was consulted also believes that the tightness will soon pass away. He says that his firm has seen absolutely r,o indications that the condition 5 at present prevailing will last for long; indeed, there are signs of a slight easing in the money market. He Attributes the tightness to a great extent lo ithe increased business done in Australia, considerable drafts being made on the banks there for the requirements of the Commonwealth. A bountiful harvest, , however, has been reaped there, and people would not want as much accommodation as in the past. He is convinced that New Zealand's prospects were never brighter, and that though it may experience a quiet year or two occasionally, its future will be full of prosperity.