The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo THURSDAY. AUGUST 20, 1912. FINANCIAL PROSPECTS.

Auckland Star, Volume XLIII, Issue 207, 29 August 1912, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo

THURSDAY. AUGUST 20, 1912. FINANCIAL PROSPECTS.

For- the cause that lacks asriatanaa, For the %mtmg that needs resistance, For the future tit the distance, And the good that tee oaa do.

During the .Budget debate several re t'erances have been made by speakers ou both sides of the House to the condition of the money market and the. possibility of any great improvement in the financial outlook in the near future. And there is this much encouragement to be drawn from our local financial authorities, that while many of them were somewhat despondent in tone as regards the existing condition of things, nobody appeared wiiling to assume the ex tremely pessimistic attitude that invariably characterised the "Reform" leaders when discussing our finances before they took office. It 'is clear, from the re-maiks made by the. Hon. J. Allen and other prominent members of the party, that, whatver tJiey thought six months a.go. they do not now regard Xew Zealand as rapidly nearing the brink of financial ruin, and that they are by no means hopeless about our chances of paying our way, aud making both ends meet in the future quite as -successfully a-s in the past. But while we can honestly- congratulate the "Reformers" on their conversion to a relatively optimistic view of the country's financial situation, we must admit that there is good reason just now for moderation in public expenditure and caution in public finance. To some extent the position of Australian finance, so far as it is dependent upon the British -money market, is an indication of our own financial prospects, and so far as can be gathered at present the outlook for the Commonwealth is by no means all that could be desired. The current issue of the "Australian Insurance and Banking Record" states that monetary conditions have shown no improvement during ihe past month, and that r >-:e could, be expected at this season of the year. "The vital question is, will the coming season give returns sufficient to restore easyconditions? This question, it is to be feared, has to be answered in the negative.'' And toe "Banking Record goes on to argue that, as it is impossible for the States to keep up their borrowing indefinitely, it may be advisable for them to curtail the public works policy, which at present necessitates constant heavy expenditure of loan money. We quote these remarks because the. analogy between Xew Zealand's position and that of the. chief Australian States is fairly close, especially in regard to our prospects of raising money at Home. But while we agree with the Australian '-Record" that the financial future of the colonies must always depend upon their ability to dispose of what they produce at profitable, rates, we vontnro to believe that in regard to the market value of its exports just now and in the near future, New Zealand is much better circumstanced -than even the most prosperous portions of the Commonwealth. JE£ut while we have sufficient confidence in. the Taraiperativc and productive _ owcts of New- Zealand to look, forward to the financial -future -with 'lrbed equanimity, there is no doubt that money is "tight" everywhere, and th.it there is no-immediate prospect of an improvement in money -market conditions either here^or Home «© far as raising loans is -concerned. The "Banking Record" teHs us- that "the -prospects of borrowing in Australia on favourable terms and to any considerable extent are by no (means-promising, while the -quotations for 'Aumtralran stocks now ruling in Londort forbid any hope of obtaining money there under an effective rate of 4 per cent, per annum." As regards local conditions we need only remind our readers that the Auckland City Council is offering 4i per cent for loan •money here without any adequate response. As to the Home market, the low price of Consols is, to some extent, an indication of the prevailing financial depression awl the difficulty of securing attention fox any now financial proposition, however attractive. We must admit, however, that there ia a prevailing tendency in certain circles to exaggerate the importance of the recent heavy ({all in British Gwwn_n«_rt, stock. A distingu___ed Prwssh. __t_u_ciai authority has pointed out re- ! centjty ttuMt all <fov*nnn«it stocks, and ! not Conaots akme_- haw dejwwsaied seriOTBiy ance 1897. 'Frew* 3 pea- cents have fallen 13 yer cent, Bru-sian 3 per xente have foijen 17 per cent, Russian 3 .per cents have ifa-llen 17 per cent, and fie puWie secu-ities of Belgium. Denmark, Holland, Sweden, Norway, sad Switzerland have all declined in corresponding proportion. It is true that

Consols have fallen more heavily than the rest— per cent in 15 years—hut this is due chiefly to the fact that only in very repent years 'has the investing public at Home come to realise that Consols are not a very remunerative investment, as compared with the many fairly gafe and highly reproductive openings for capital now open to all sections of the investing public. Yet such is the prestige of Consols that their fall, though natural and inevitable under the circumstances, has produced a widespread, sense of insecurity and depression at Home: a,nd we 'believe stoat this reactionary influence of the fall of Consols has had a more injurious effect upon the state of the British Money Market just now than any other single cause that could be. suggested or defined.