Bay of Plenty Times. EVENING DAILY FRIDAY, JANUARY 24th., 1936 MONEY RATES.

Bay of Plenty Times, Volume LXIV, Issue 11931, 24 January 1936, Page 2

Bay of Plenty Times. EVENING DAILY FRIDAY, JANUARY 24th., 1936 MONEY RATES.

London adyices indicate that there is now a definite upward swing in money rates, that is to say the period of cheap money is coming to an end. and that was inevitable. The city editor of the ‘‘Morning Post," says the course of tlie market has plainly shown that both speculation and investment are less attracted to gilt-edg-ed than formerly, and are widening their field in search of better returns. Signs of trade improvement, and rising commodity prices, seem to indicate that the upward swing in the trade cycle is definitely under way.” The first real indication of the changed attitude of investors was in connection with the Commonwealth conversion loan. This loan was for £21,657,000 at 3 per cent., with the issue price at 951 yielding to the investors £3 6s per cent, redemption included. The loan closed on January 14th, and the results showed that 50 per cent, of the issue had to be taken up by the underwriters. The loan was a failure so far as the public was concerned, but that fact was no reflection on the credit standing of the Commonwealth, but an error of judgment on the part of those issuing the Joan, and the underwriters in not taking note of the trend of the money market. Towards the end of July last year the Commonwealth placed on the London market a conversion loan of £13,469,081, interest at 3 per cent., and the issue price was par. This loan was heavily oversubscribed. The cash lists were open for only five minutes. This issue, however, was for the short period of six years, while the issue under review has a currency of at least 19 years. The fact remains that the'era of cheap money is definitely at an end, and that is a matter for optimism. for it is proof positive that the process of economic recovery continues, at least in Britain, and is bound to have a favourable influence on other countries. This new development is to be welcomed, for it is to the advantage of the whole community to see money fully employed. Idle money means idle hands or unemployment. There is non- brighter and better hope that as the volume of idle finds employment, unemployment amongst the workers will be gradually obliterated. It is to be hoped-Governments everywhere will do their utmost to stimulate investment in industrial ventures, and that can best be done by removing all obstacles to investment and refraining from direct interference. This changed attitude of investors and speculators will have its repercussions on the Stock Exchanges. Private investors in Government securities in this Dominion are selling out, and re-investing the proceeds in British industrial stocks, in the absence of similar outlets for investment in New Zealand. We have really very few industrial and commercial shares available in New Zealand, and even if we include Australia the field is not big enough to serve both countries. It must be remembered that idle money has accumulated in New Zealand, because investors have been shut out of the mortgage market. All the available money cannot find investment* in New Zealand, hence some of it is being transferred to Australia and to London.