LOAN MARKET.

Auckland Star, Volume LVI, Issue 293, 11 December 1925, Page 6

LOAN MARKET.

BANKER'S WARNING.

CAUTION IN BORROWIHG. j ■ —J DIFFICULTIES IN LONDON./^ " -, "a (By Telegraph—Special to "Star.") > WELLINGTON, this day. \

Reference to the state of the money market was made by Sir George Elliot in his address at the Bank of New Zealand meeting to-day. Sir George eaid"Notwithstanding the liftinw of the embargo, which was recently" imposed on the floating of foreign and colonial loans in London, it is difficult to get money there act th present moment," ex« cept at a high rate of interest. In view of the depression of trade which T» e « vails in Great Britain, the high taxation, and the enormous to America, it is doubtful if colonial Governments can look to London with any confidence to supply _ their, monetary wants for some time to come. It is doubtful, too, if America will supply cur needs in the meantime, for it Lj quite apparent that the American public was not enthusiastically interested ■in the last Australian loan floated there Underwriters and speculators must hava been left with a large proportion of it for even quite recently every lending lZ stitution in this country was being offered large quantities of this Austria lian loan by American brokers.

"The difficulty in the immediate future of raising loans may be a blessing In dig. guise, if thereby a brake is put on pm>. lie borrowing. Much of the recent expenditure of local bodies has been unwarranted. reticulation schemes, especially those serving scattered populations, must for many years be a burden on the ratepayers. There has also been unjustifiable'expenditure by harbour boards desiring to encourage overseas shipping, upon harboure where the total export trade of the district served would not, if the produce could be held up for a year, completely fill one averaged-sized ship. "As far as the flotation of loans ij concerned, Xew Zealand will in the, future, I think, have to depend upon hep own resources to a greater extent Ihau has been the case in the past; and, un« less loan issues are carefully and, judi. eiously spread, high rates of interest will have to be paid. Economy has b»a preached from this chair for years, feut 1 it appears to be that it would be superfluous to say much upon that eubject to-day. There are signs of the times which may easily be read, and which afc the moment indicate that economy will be forced on the public and local bodies whether they like it or not. It is not an original idea, but I think it ie a. good one, that contemplated expenditure by public bodies on local works should' be first reported on by a competent Government official, and that his report should be circulated throughout the digtrict before a vote of the ratepayers is; taken on the question." ■ 1