ADVANCE ON WOOL

Clutha Leader, Volume XLVII, Issue 51, 24 December 1920, Page 7

ADVANCE ON WOOL

NOTE ISSUE 'AUTHORISED.

The Order-iiHCouiverl published in this week's "Gazette," authorising the Ibanks to issue additional notes to the amount of the advances they may pi&ke on wool held in the stores or by farmers, has caused a good deal of surprise in Welingtou. The notes in circulation in New Zealand have increased from alboiit £2,000,000 in 19H to Over £7,000,000 at the present time, guild it has been stated 'by many authorities—including the 'Minister of Finance—that inflation of the currency is a very important factor in increasing the cost of living. H a substantial part of this season's wool clip requires to .he held over, the increase in the note issue under the Order-iu-'Comi-CSI might assume very fomnidaWe pro-, portions. Tho new order is regarded officially merely as a safeguard. The banks are «K>i expected to require to make extended use .of the authority that is feeing given to them. Bank credits are being reduced .-firmly at the present time, and this is a very important Step towards deflation of the currency, Which, naturally, would be accompanied by a reduction of the note issue: . The ©stent of the advances that nifill Ibe required on wool cannot be gauged yet, tout already it is known that Itfany fanuiers will -hold their ©lmi wool, without seeking assistance, end that others are disposed to sell end 'take the chances of the market. The'advances made 'by the banks, on the average, will be only a part of the nominal values of the wool, as indicated Iby the auctions, and the total liability will not be as large as might be anticipated at first glance. That, Rt any rate, is the official view.