The Dominion. SATURDAY, DECEMBER 21, 1907. FINANCIAL FOLLY.

Dominion, Volume 1, Issue 75, 21 December 1907, Page 4

The Dominion. SATURDAY, DECEMBER 21, 1907. FINANCIAL FOLLY.

When the financial, panic .began, in, New : Ybit. the Premier was . asked' 'if New.: Zqalanil. : would be affected. •.,3£itli tliat unreasoning optimism, of his .be. declared : /.'Mo, New Zealand is outside the zone." It is thoughtless -answers like this which cause tie judicious to wonder and grieve. Later .lie. has de-clared.-that everything f is most.flourishr. ing in New . Zealand: plenty ,of cheap money, vast.exports, a brimming, revenue, etc. All this airy optimism f reacls very cheery—but what are the "facts? Money is very dear everywhere in the civilised world. Bankers in Npw: York lent money at SO per cent., 100. per cent., and 125 per cent. United States bankers -borrowed all they could in London; then they tried the Bank of France for £-3,001),000, which was refused. The,vßank of England raised its rate to T . per Cent.. Money was. dearer still in" Germany, ..Norway, Sweden, • and Russia. Money lias .been cheaper:, in Australia and New Zealand than-Anywhere else, but in the Commonwealth and New Zealand. hardening,,-and will harden. .. .Money, that might be lent in 4ustralia is some OjE it being lent in London—-where' it brings,higher rates, of interest. ' Austoa: lia and New Zealand are not./' outside, the zone" of 'dear money,- as Sir Joseph Ward glibly said—but 'already•• are feeling .. the 'effects..- . All men realise that money here has : a .disr. tinctly.-hardening tendency.:.- Some, of the great lending companies are run-; •Ding dry: There has been a great demand .lately. for money on. mortgage from the Government lending departments; It is idle to disguise that money that is, lent on mortgage in "New Zealand is. beginning to grow scarcer,: and that money will shortly bring higher rates of interest. Though the panic is over in New: York, the financial position in' the United States . is .very.gpHous. The great'steel works have- discharged 50,000 hands—and steel is a great trade* barometer. The banks outside New York are suffering greatly -from want of money. Two banks with ■£4,000;000 each went bankrupt since the panic was stopped. 'Recently over 200,000 working people returned. to Europe—things were-so bad in the United States. About three weeks ago the president of 'the English bankers said money would be very dear , in England for a considerable time; Money is very scarce and dear in Germany, and trade very dull. Banks and great mohey : leniling companies trading in London and Australia are finding most profitable uses for money in England—naturally they will be shy of advancing money at cheap rates in the Commonwealth and this Dominion.. All these thiilgs will tend to harden lending rates in New Zeal and. At the meeting of the Bank of New ..Zealand this'month the Chairman*, Mr,

BeauoV,mp ) uttered a grave warning that feorae lending institutions wei'e overtrading, and did not keep large ei'.oivgh reserves, and the directors of •tftesc companies,, seeing ..what has. happened in New York, are restricting advances — again making monev 'scarcer. *

•Then,' though tlie Premier glibly ■says the Dominion is outside the zone ormineMe of-Jfeiv York, other facts show .how untrustworthy-, is .the state■Diept, Tako this season's .wool.clip. With ■ ™9noy-.-i4.-t]ip JJnited :S.tatoß» their •wool-buyers are not operating., ; in .effect they are out of the markets That ! lowers our_ "\vjoolprices, .and brings us within.the frone;;Dear money in the '■Unil:ed S J „ates has made dear .money in Eriglan.^—again helping to bring down the r«rice of our staple product, wool. :^-4& -Americans, eager .to sell any. proi tloce tlaat will sell, are hurrying wheat dnto England—and wheat has fallen. They are hurrying forward beef into i^ngluijd—to; gather in more money, ;nnd our frozen nieat_ in England is dossil considerably in consequencePelts _ (dressedsheep - skins), whioh ,'A.tncrica used to buyilargely, are down ■30 per cent;.. . Our New Zealand hemp Jias dropped £10 a ton. Cotton is bepoured .into' tondoii;; from ■ the '■ Vcitcd' States in .their .frantic endeavour''to bring, in gold—that again helfs to .lower the, price .of our wool. , Yet the' .Premier,. in. his reckless ' optimism,, or in his desire to say the /popular thing, sdys New. Zealand is outside the. zone. Sheep of all kinds in. th'Q Dominion. are far cheaper than they_'Were These' facts are indisputable—money is hardening, ;and will harden, and" our staple products;; exfeept butter, and' cheese? 'are going down iii price.'- In- face of these and a-htfst? pf ! -Kintodffa'6tsrit; would have' been- wiser- of the''' Premier to have sounded a:note of warning. A statesman" viewing these facts would have warned ; the people that 'the Dominion was entering into a" period of lower prie'es for its products, ahd' that, as money was very dear, throughout the -civilised '.worlds, money - must become "dearer-;-iii- Ncw . Zealand. ■; The public: have:- Tight -to=:expect; a lead • th? Premier's. speeches...- . The public : : are,,-sensible..- If they realise that-a-lfean Jrear 'or twb are' ih -front of 'them, ,tli'ey -. will- arrange , to liieet the situation;; and many' a mail would put his/house %'brd.er and prepare to meet quieter" tinics, and' later be thankful to the Premier had he warned him. vTust before this financial'crisis in the ■United States, ail American. Minister .talked, on the marvellous progioss of the country ; on the; greatness of the wheat and cotton 'industries, tlio magnitude of the beef ~and hog farming, the enormous! undeveloped-resources, .lie., boasted of the moneyed, wealthy of ithe' United States; of, their hurrying industrial .'development'.' It-was a great 'spe'ecl\,'.gi'viiig,. golden yisiobs'of future came .' directly' .after,'; and what, was*'the uSe of; that speech?"'lt did lii\nil ; iiist.oaxi■ <jf good; it .gave no warning note; as-.it' should liav'e ddtie. • " y'■ ■ .

\ i T]iei-e" fgrr .'alatiii' iii,.'3S*ew 'Zealand,. Bat., it '.is tli.e 'rre'mier.'tq. tell the people we "are "" out- . side the zone "of, dear" money"' at tlie "very timewhenmoney has.begun to grow'-dear, and will'grmr still dearer. It 'is;-foolish"'of tile I 'Premier to boast —at the very moment when the prices, of: such ■'■products as 'wool, :meat,spelts, tallow, he^np,"wheat, etc., are falling. The farmer is a sensible style of man;' he wants to -know- whether- his 'wool ,tfill fetch good or medium prices dur'ing 1908; whether his surplus from the farm will fetch good,Tadj or indifferent''prices.-,- The Premier 'boldly'-tells : him " everything is right as rain," there is plenty of money, we are outside the " zone of dear money." The lowered-prices at the wool sales this :']3ec£mserV,^ are- within the"'z6ney'- arid : -,thit already 'dear money in the- Old World has lowered the- price of wool and the value' •of every sheep in the country. The fact is that the country-has enjoyed a glorious era; has had ."good times" 'for -several : -'years -past',' and; it is not' !pessimism,- but simple, sound,, corn-'ihon-sense for every farmer and every iman ih' :: 'th6'T)'6mimdn"'t'o' redlise that, whilst money'is dear in 1 the-Old World, tire'.values; of .our exports will; be'.lower; and money -. be scarcer ~, Had the Americans; foreseen ..the'-coming shortage of money a year ago, they wpuld nothave'suffered "so much. Some cleVer : people in the United States did foresee' trouble. Tliev were called ' croakers," " old fossils," but they hedgcd : , .they cut down their, liabilities, they trimmed their, trade to Irieet the strain,' •and^they-.;hav.e come through ;th'e''^'CTisis•-^•'unharmed.: , •••"•lf"• people, here ,realise th#-^ear^mQiiej%'-|luK)jpe 'and the\ ..TJniteid - v : St'at,es. ineaiia *...lowered 'prices .for ,■their; v products, then they ;will - ; emerge' -from .-the -leaner years triumphant." - The' silly .ostrich .which buries, its .head' in' the sand',, and refuses ito see a danger-, finds,that the danger ;comes, and it might escape if • it- had 'its eyes open. •