THE COUNTRY'S MONEY.

Auckland Star, Volume LIX, Issue 268, 12 November 1928, Page 4

THE COUNTRY'S MONEY.

WHERE HAS IT GONE? BUSINESS MEN COMPLAIN. Dtsjjite the fact that the balance of exports over imports last season totalled over £11,500,000, and that these figures have been reflected in the banking returns general business, which had been subject to a marked depression for a couple of years, appears to make an exceedingly tardy recovery. Speaking at the annual meeting of Sharland and Co. in Wellington, the chairman of directors, Mr. W. Watson, said, inter alia:—"When wc last met there was every reason to expect an increase in the sales of the company's goods throughout the financial year ending August 31, 1928, but in common, I believe, with other wholesale houses our experience has been that the expected revival in trade was further delayed. The large returns from the exports of the Dominion have caused a corresponding increase in the supply of money, but apparently it has either not yet filtered through into the hands of the general public, or it has been used in saving or otherwise." In a similar strain Mr. E. Halsted, chairman of directors of the Drapery and General Importing Company, spoke at this company's annual meeting. He said:— "It was not only in Wellington that the past year was a trying one. In common with all business people we found it a year of disappointment and of hope deferred. In spite of a splendid season and the excellent prices realised for all our staple exports, business generally did not improve as expected. However, we still look forward with confidence to an early improvement and to better things during the current year." These statements, which are fairly typical of a large proportion of business concerns throughout the Dominion, clearly indicate how much easier it is to reach a stage of national depression in business than it is to emerge therefrom. Even when the money is available, as it is at the present time, and has been for some months, the results are only partially reflected in retail trade, a fact which is clearly shown in the unemployment figures. The fact of the matter is that once confidence is shaken it returns but slowly. This has been very clearly demonstrated in regard to farm secutities during the last ten years. More recently city and other industrial enterprises have, as the result of financial tightness, suffered a trying time, and although the money is undoubtedly in the country it has not come into general circulation. The surplus cash is being very largely either hoarded in the shape of bank deposits or placed in gilt-edged securities. Such investments have only a restricted bearing on general trad*. Moreover, as has already been emphasised in these columns, very large sums have been sent to Australia where interest rates are higher. If the sums invested in the classes jußt indicated were 6pent on farming or city enterprises the retail shops would receive a definite stimulus which has so far been lacking. If a bank receives £5,000,000 more than it needs to satisfy its customers' normal requirements it invests the amount wherever seems most profitable, possibly in Australia or England. In such case only the interest finds its way into local circulation. If insurance companies, which hold millions of the people's money in the shape of investments placed these funds on farm mortgages as was the custom before farm securities became unpopular every pound would be immediately remunerative to the community as a whole through increased production from the land. Insurance companies, however, keep their funds chiefly in banks and Government and municipal debentures, some local and some in other countries. Here again, with regard to the proportion invested outside only the bare interest finds its way into local use. Contrasted with such investments one has only to take the case of a local industrial enterprise which borrows, says, £ 10,000, to extend its business. The whole of that amount is spent almost immediately in local concerns which redistribute the funds amongst the wage-earners in one form or another. One has only to multiply such instances to realise how vitally the trend of investment can affect the well-being of the masses.