LOANS AND MONEY

Evening Post, Volume CVIII, Issue 148, 19 December 1929, Page 8

LOANS AND MONEY

Reference was made in our Financial columns yesterday to Australian local loans that will have to be met next year. The total sum required for maturing Federal and State issues is formidable, being in the vicinity of £117,000,000—n0t including local body loans that may also be falling due in 1930. The Commonwealth Government itself will have to meet £10,750,000 in March and £61,900,-j 000 in December, loans issued at 6 per cent., a high rate in any circumstances. Of its most recent local loan, £10,000,000, which closed last Monday, nothing later is available than that when the last Sydney mail left approximately £5,000,000 had been subscribed. In normal times this loan should have been generously oversubscribed, for it was offered on very attractive terms—viz., issued at £98, bearing interest at 5£ per cent., yielding (including redemption) £5 14s 4d per cent., and with a currency of but five years. Up to the present we are not aware that it has been "rushed" by the public, or even fully subscribed. True, the banks have underwritten this loan, so that, assuming public subscriptions amount to, say, £7,000,000, the banks will have to provide a substantial balance. They will, and can do so, but their lending capacity for industrial and commercial purposes will be reduced accordingly. The ten million loan above referred to is buta detail in the picture, a "closeup (to adopt the parlance of the cinema) of the monetary prospects for 1930. It is difficult with Australian Federal and State Governments, hard put to it for ready cash, to see how the price of money can remain where it is, not only in the Australian market, but in that of New Zealand. Manifestly, with the high rates already ruling in Australia, any surplus funds in New Zealand seeking gilt-edged investment will go where the highest price for it is obtainable. But is this Dominion in such an affluent position at the moment as to be indifferent to flights of money across the Tasman Sea? It seems perfectly clear that during 1930 at any rate, the Australian banks will have allstheir-work to do in meeting local demands with such funds as they can command, and New Zealand will have to depend upon its own resources to meet immediate and possibly urgent needs; but will it be able to do so at current rates of interest?