MONEY MARKET

Evening Post, Volume CVII, Issue 145, 20 June 1924, Page 3

MONEY MARKET

IS LOG \L BORROV ING EXCESSI\E'

Pointing out tint Jocil bodies loiim op pio\cd by tlit Ciineinmeut totilled i^O 1"* 490 foi ilie p ist t\ uve months, Jli Watvui ictiu ciniirajii of tlie kink of ivt, Zulmd todij, while id MuHin,; th it m most instances the money ni'-ed \\«.s beint; used foi the ad\anti,;» of ntcpj\oi^ md oltei toi woiks of A molt, oilier pressing uituie, it w is io bi legietted that such irreat expendituis was bem o mtuiitd wJitn the mteie&t 1 itea .ma the cu>t ot the lelatrve woiks weie e\ccissi\dj higli >se\\ Zealind bem' in e\pottn\^ countij, tlie ctpilaj es.pendituie of the Go\ eminent and local bodic should be jno t rucfullv watched, foi the bmdeu of i itcs md taxes must become oppi&ssno jf Mlues of pioducts ral Lxpenditjie at the {.recent rate cannot be 1 ept up foi lonj,, and when it eises off coivudenblv tne Dominion i mij be ficed with the pioblem of unemploMiitnt

With but few exceptions, local bodies ' have to pay 6 per cent .for their loan, requirements. The heavy cost of transfening proceeds of loans from London has militated against borrowing .'in that market, but' a recent improvement in; \ monetary conditions there, had enabled several issues to'"1 be made at a'" net' cost to the.borrower of about 5|; per cent., >'. Tlie issue locally of Joans of- local bodies had adversely affected the increaseof fixed deposits with thebanks,', and; coupled with the competition of-th?' I'ost. Office Savings Bank: and companies; for deposits, the landing resources of: the banks did'not expand as it wasdeshsable they.should do. .'. ■>■'-''■': '.., Several of tbo most- important of 'the Farmers! Co-operative trading prganiga-, tions had taken advantage of the legislation passed in 1922 to arrange 'with their depositors and bondholders, for7a postponement over a period of years of payment of *their. relative indebtedness.' There is little reason to doubt that thosa creditors will be paid in full/ aiid,';in'ths, meantime, receive interest,1 - whilst -the' : postponement of payment of principal will enable the companies: to :give such ot ) their debtors who are at present unable ' to meet.'their liabilities reasonable time to work out their own salvation. - ',-

In tHe North Island money is now rarely; obtainable oh mortgage, at less than f>y per cent. Conditions are easier in the South, where the_ ruling r.ate_ior, first-class mortgages is 6 per cent. • The banks have been in a position to meet the proper banking :reqiiirements,.<ii, their customers, but much b'usihess tvaV bein<r offered that does not'come withia that;.category,-;'arid, consequently,: had to bo refused. ■' , ; . ,'

There were many complaints that; in: v individual cases, the Department is not lending .a reasonable amount. / "From, what we -know "of: the activities, of th 6 Department, it seems to us that only an adequate. margin of safety is being-in- ' eisted on,'1, said Watson.;.-; "Appar- ■ ently'quite, n. large number of fail to recognise that land slloiild be yaT. - ued on-the basis of what it caii' produce,' -^ and that'a mortgagee's estimate of valuV ,1b invariably and properly less than.that of a vendpr." . '