The Bay of Plenty Times SATURDAY, JANUARY 18th, 1941 THE BUSINESS OUTLOOK

Bay of Plenty Times, Volume LXIX, Issue 13242, 18 January 1941, Page 2

The Bay of Plenty Times SATURDAY, JANUARY 18th, 1941 THE BUSINESS OUTLOOK

The business outlook for 1941 does not appear to be very promising. The resumption of business by the Stock Exchanges of the Dominion was marked by dullness, a dullness more noticeable than for years past Perhaps there are special circumstances to account for this. There are the income tax payments due next month, to be followed in March by the payment of the last instalment of the compulsory war loans. These payments practically mean providing for double income tax in one year. How is this going to affect the business of joint companies® Turnover and returns may be as large as eVer but net profits are certain to be lower. The end of risingcosts appears not yet to be in sight. "War expenditure'has to be provided for and it is expected that the allocation will be greater than last year and therefore there must be further taxation which will add to the costs of production and manufacture. Then comes the question as to whether dividends will be maintained:' If they are not maintained values will recede and holders of stocks and shares Avill sutler losses. The war is still raging, and it is possible that it may spread to the Pacific. On the other hand either the Germans or the British must take the offensive. Prom all accounts Hitler is in a desperate position, and it is believed that he will be forced to take some drastic steps within the next two months. No one can see the end of the war, and while it lasts expenditure must necessarily be on a lavish scale, and while the money is being spent things may appear to be satisfactory. But the war must end for it is not a chronic condition of life. Some visualise drastic changes when hostilities come to an end. One thing that is considered certain is that there will be a strong demand for capital, particularly in Europe. The enormous damage done to cities and towns must be repaired, numerous buildings will have to be erected and the demand for capital to carry out this work will be very strong. And the demand for capital will fall upon markets already very much depleted of funds. Thus with a strong demand and short supplies money rates must advance, and that would necessitate a readjustments of values. Dear money means cheaped goods and services and in readjusting this there may be Yery considerable trouble. In our own case there was less money available for business at the end of November last than in the middle of last year. For the four weeks ended November 25. the demand or free deposits amounted to £48,203,869, while on June 24, 1940, these deposits stood at £49,112,596, and the tinle or fixed deposits totalled £29,734,816, while in June last they totalled £31,357,451. Both "classes of deposits on November amounted' to £77,938,685,, while on June 24 they amounted to £80,500,077. There was thus a shrinkage of about £2,600,000, and the position has probably deteriorated since then. The outlook appears very uncertain, and therefore people would be well advised to save andl)e prepared for the unexpected.