THE MONEY MARKET.

Hastings Standard, Issue 235, 1 February 1897, Page 2

THE MONEY MARKET.

The cables flashed a very welcome piece of news last week, and the announcement that the Bank of England's discount rate was lowered to 3| per cent on Wednesday last will be received with satisfaction in financial circles. All through the year 1895 and up to September, 189G, the discount rate was at the bed-rock figure of 2 per cent. Then was an era of cheap money and unbridled speculation not without material advantage to this colony, for under the sway of cheap money a golden stream set in towards New Zealand, and the mining boom, from which so much good has resulted, was set in motion. It was on the 10th September last year that the Bank of England without any warning and when least expected advanced its discount rate from 2 to per cent; a fortnight later, on the 24th September, a further advance to 3 per cent was made, and on the 22nd October another jump to 4 per cent took place. These staccato movements paralysed for a time the money market, and the stock exchanges suffered severely. The tightening of money was most severely felt by the mining share market, and to illustrate its effect we may quote the Investors' Review which made a comparison of twenty-three of the principal mining and land companies of the Rand, taking the market value of the shares at an interval of twelve months. Thus the share capital of these twenty-three companies aggregating £10,015,770 stood in the market in 1895 at a value of ,£82,223,475. In October, 1896, the market value had declined to £45,583,133, thus showing a depreciation of £'36,640,342 or 44 per cent.

The result of the advance in the bank rate so far as this colony was concerned was specially noticeable; option holders of first class mining properties were unable to dispose of their options, and were compelled to obtain an extension of time. The London market was not in a condition to absorb New Zealand mining ventures, and though two or three, such as the Whangamata Proprietary, the Collingwood Goldfields, and the Kapai - Vermont were successful, the majority of the option holders were unable to make a deal. The turn of the tide has come in the lowering of* tho bank discount rate, and the opinion we have already expressed in this column that a mining revival would take place about February or March, seems destined to be realised, for if the raising of the Bank rate operated against us, then the lowering of the rate must favorably affect us. The main cans*) of the adverse movement in the Bank rate, was the heavy j withdrawal of gold on America's'

account, added to the inflammatory nature of European politics. The success of the " honesty money " party in the American Presidential election with the immediate result of commercial activity in the United States, tended to check the withdrawal of gold, while the political horizon, judging by the Queen's Speech at the opening of the Imperial Parliament, though not clear, has had many of the nimbus clouds lifted. Given a peaceful foreign outlook, the months that follow on the heels of January should see commercial activity the world over.