The Gisborne Times PUBLISHED DAILY. SATURDAY, FEBRUARY 25, 1922. MR BEAUCHAMP AND THE MONEY MARKET.

Gisborne Times, Volume LVI, Issue 6321, 25 February 1922, Page 4

The Gisborne Times PUBLISHED DAILY. SATURDAY, FEBRUARY 25, 1922. MR BEAUCHAMP AND THE MONEY MARKET.

What is most required in this Dominion at the present • time is an opportunity to secure money at a reasonable rate of interest for the prosecution of public works and tno extension of private enterprise. It is well known that the Government has authority to raise sufficient moneys for a large programme of national undertakings, but Mr Massey is holding off the London market in the hope that money, which has lately considerably eased in price, may shortly become still cheaper. Whilst fault ‘cannot be found with him in this respect, let it bo trusted that the day cf dear money will soon he past. It* is most important that the Government should carry on national j works as speedily as possible. The "Government is, however, not alone under the disability of having to curtail expenditure on new works. In every district in the Dominion, local bodies are awaiting a chance of securing loans at a reasonable price to enable important works to be .undertaken. Then, again, private enterprise is also badly handicapped m a similar direction. It is, happily, true that money has become more plentiful at Home for investment in the Overseas Dominions. Late cables, indeed, indicate- that Colonial stocks to-day are being eagerly sought after and new issues are being readily "taken up at a lower rate of interest. Li his interview with a representative of this journal, Mr Beauchamp, chairman of the Bank of New Zealand, opined that the growing demand at Home for gilt-edged securities was occasioned by the lack of confidence, on the part of investors, in industrial and commercial securities on account if the unsettled Labor and market conditions. There is, no doubt, not a little in his contention; but we do not think that the explanation is by any means complete. It seems to us that the unsettled state of Europe, in particular, will become more and more helpful to the Overseas Dominions in that it must make for a better money market for them, although, on t'he other hand, it will mean not such a good market lor overseas produce as would be available if Britain could command larger orders for her manufactures. An important fact that has been overlooked by Mr Beauchamp is that Britain to-day is lending only a small aggregate to Russia, Germany, and other foreign countries ns compared with the pre-war position. This can load to but one result : and that is that the amount cr British money available for investment in the Overseas Dominions will steadily grow until it is once again "felt safe to invest heavily in foreign countries. If we are not mistaken, money must become very much cheaper in' Britain, because not only lias America much more spare cash than she knows what to do with but the field fer investment for surplus money in Britain is likely to remain restricted for some time to come. The pom stressed by .Mr Beauchamp that

there is, even to-day, a plethora of j money in London—is, of course, evi- ; 'deneed bv the fact that the bank j rate at Homo has been reduced to j 4,1 per cent. It may be recalled that 'from April, 1920, to April, 1921, it stood at 7 per cent., and was then reduced to 62 per,cent. Two months later—in June last—it dropped to 6 per cent., and a month later to 5$ per cent. By November last the rate had fallen to 5 per cent, and now it is down to 4 A per cent. Nominally the bank rate at Home is from 4 to 5 per cent., but in 1905, 1908, and 1909 it was down for short periods to as low as 2-J per cent., and in 1912 and 1914 it touched 3 per cent. We may be wrong, but we believe that it will soon drop below the present figure—,4l per cent. If the money market becomes easier at Home it will not only assist Britain’s languishing industries, but it will also mean that there will he plenty of money for the Overseas Dominions at a cheap rats of interest, seeing that it is most unlikely that, for a long time ahead, as much British money as formerly will find its way into foreign investments. All the talk about the need for Britain to assist Russia, for example, is futile, whilst Bolshevism is so rampant. In the circumstances, we must regard the financial position as becoming much more rosy and we trust that the unhappy prophecy of banking magnates in this Dominion—that the improved position at Home may not he Reflected here for a year or two —will not turn out to he correct.