THE MONEY-FLOW

Evening Post, Volume XCIX, Issue 90, 16 April 1920, Page 6

THE MONEY-FLOW

New Zealand is among the, few highly favoured countries of the world whose exports greatly. exceed their imports in value.* Import figures for the 12 months ended 29th February are not yet available, but the values of these for 1919 were ■£'30,671,700, whereas exports for the 12 months ended 29th February last were £51,595.000,"0r '£23,595,000 more than for the corresponding twelve months of 1919. The great difference in favour ci the cur. rent year is accounted for by increased shipping tonnage available. But tho fact ha^s to be kept in mind that much of the produce exported had been paid for months before it was shipped, and the proceeds put into circulation. The exports above referred to are confined to the produce of the .Dominion, and do not include gold in bullion and specie. The returns of the New 'Zealand banks for the quarter in review clearly show "unmistakably how great is the flow- of money into the Dominion in payment for its produce. The fixed deposits and free deposits • (or current accounts) of the banks in ihe aggregate amount to £50,665,090, and the'advances on money lent out of the funds thus placed at the banks' disposal for the same quarter totalled £32,042,043, showing a surplus of the public's funds in the banks of £18,623,048. An unparalleled amount is held by the banks for their depositors. It means that these people have -abundant funds at their disposal as a result of production and trading, making -a relatively vast amount of money available for employment. It seems paradoxical to say- so, but a country can istiffer from a. plethora of money. Money is primarily for use, not for hoarding. There are surely numerous legitimate outlets in New Zealand for its use. What appears to be wanting is not so much opportunities for investment as confidence in the future.

So far as the primary producers, traders, or whoever else owns the surplus of deposit* over advances; are concerned, the Dominion, is shown by the returns to be quite flush of money; that the set of wealth is towards these shores, as the. great herring shoals periodically head for the coasts of Britain. How long this will I'continue no one should venture to say, for no one knows for certain how, long present high values for all that New Zealand exports will stand. Conclusions on the fragile basis of surmiEe are dangerous. The superabundant money coining to this country in payment for produce no doubt accounts in some measure for the enormous appreciation in values of rural land. There has been, and is, an eagerness to buy lands suitable ivc dairying at pricss that

would be appalling should anything happen to the butter and cheese markets of the world. Speculation has been and is very prevalent in certain parts of the North Island in properties suitable for milk production, and, to a considerable extent, for wool production also. Shrewd students of financial. meteorology have become anxious about these high land values. They freely describe them as, inflated. But two signs have lately been given that may gortend a change in the warm weather : (1) The recent raising of the rate 'of discount of the Bank of France from 5 per cent, (since 20th August, 1914) to 6 per cent.; and (2) the cablegram 'received to-day of the raising of the^Bank of England rate to 7 per cenj. from the 6 per cent, fixed in November last, when it was raised from 5 per cent.—at which it hacf 1 stood unchanged from sth April, 1917. The heavy increasfe in the deposits in New. Zealand banks, gratifying as they certainly are, must not be allowed, to cloud the vision to signs of moventent in financial London, in the direction of curtailing credit and making money more difficult to obtain.