THE MONEY MARKET

Evening Post, Volume LXXXIV, Issue 1, 1 July 1912, Page 3

THE MONEY MARKET

TO THE EUIZOB. Shy— For "evidence of gross ignovaue© of tha truo function of money I conirn&nd to you the ktier ajjpeaiintf in Scaturda-y's " istfue oVe.r the .signature of T". T. Mooie. .In 'tho fu*t v iJ a<'ewhai; earthly use AVould fcMi- millions' of paper be to our Government al tfco pruscnl< tim&, ,eveii if backed by bcm'ds over Crown or other. lnj»d«? Our foreign cieditore don't wttnt to posse^B or fon--closo upon lafld ov anything ebe in Nev/- Zealand, nor do they cai'6'to concern themselves with the valuations wo may put upon it. Supposing th«y were to accept our paper money in payment of interest on our National Debt, imports, €ttoc o what use could they make of our paper, seeing that it would carry no interest, noi* would it bo legal tender ia their countries? If iha pedplo of N«w Zealand ai'e' willing to use paper money for ' internal trade thatje quite another matter, and KW Zpaian.4 orUy; hut i would like to. p^jjtt

out to your correspondent {hat in 6uch a case an issue of four millions of paper money hera \fould inevitably bo followed by an. export of a like amount of gold from New Zealand. What would be th« use of keeping gold here if paper money served tho sauio purpose just ac well? The Labour Commonwealth Government has recently, issued about ten millions of paper money, with the natural result that heavy shipments o'/ the precious metal are now being mide from Australia. Thie paper money has been tried over and over by many countries, with the above result, and, when disaster has been brought to $> country's trade, it usually comes to its Senses, borrowing gold to start afresh, calls in the paper lefiue, and gives Console in exchange threfor, co that paper money resolves itself sooner or later into a -'permanent increment of the National De,bt. Seeing that "New Zealand was never in a, more- prosperous condition than it is today," I should, like many others, like to know why our Government needs to borrow four millions, or any part of it._ According to yonr correspondent, this country is suffering financial restric-' tions of the severest nature. Sir, I don't believe it. My own experience is that loanable credit is plentiful, but that I have tho utmoet difficulty m finding any reasonably safe securities, a-nd that to-day I caainot get more than 5 per cent., 1 even if I advance from £25 to £35 per acre on first-cla&s ' land. The fact is, 6ir, that while my cash Jand doubtless that of thousands > more) is lying idle the Government borrows money abroad at practically 5 par cent., which ie more than we can get here. Tho Government should do as the ' Victorian Government ha 6 done in the past, and there would then bo no cry for financial help. — I am, etc., SHORTHORN. 26th June.