The Star Delivered every evening' by 5 o'clock in Hawera, Manaia, Normanby, Okaiawa, Eltham, Mangatoki, Kaponga, Awatuna, Opunake, Otakeho, Manutahi, Alton, Hurleyville, Patea. Waverley. MONDAY, DECEMBER 8, 1913. WHY MONEY IS SCARCE AND DEAR.

Hawera & Normanby Star, Volume LXV, Issue LXV, 8 December 1913, Page 4

The Star Delivered every evening' by 5 o'clock in Hawera, Manaia, Normanby, Okaiawa, Eltham, Mangatoki, Kaponga, Awatuna, Opunake, Otakeho, Manutahi, Alton, Hurleyville, Patea. Waverley. MONDAY, DECEMBER 8, 1913. WHY MONEY IS SCARCE AND DEAR.

It is satisfactory, t-ven in connection with a critical or unpleasant subject, to find that opinions which have been independently expressed by public men and public writers in the colonies, are in accord with opinions which have been similarly expressed in the Old .World. Of course, when the subjects involved are world-subjects, there is nothing to wonder at in this, for they are governed by laws and contingencies open to the observation and study of all; but what is satisfactory in the accord referred to is that it is evidence that large subjects are studied in the colonies with an intelligence corresponding to that with which they are studied in the Old World, where there is a larger body ©f community of knowledge in such things j and therefore more to stimulate and assist comprehensive criticism. The fact itself, however, apart from any purely local grounds for gratification, is of good omen for the Empire, for ties of blood and mutual material interest cannot have a better ally than community of intelligence; that is, a common comprehensive mental outlook with respect to subjects in the importance of which the whole Empire , has a common interest. Money or capital open for investment assuredly stands in this category, and concerning this subject the readers of some New Zealand newspapers could have read and probably did read months ago, opinions which have since then been independently expressed in leading Old World journals. This identity in criticism has a double and special value, too, especially in the colonial communities, for the merely casual colonial reader, when he comes to know that local opinion substantially accords with that in the 01<T World, will take a subject more seriously, and become mentally a more conscientious and better informed man, and such men are the men of most value to their own communities and the Empire at large. Anyway, those of our readers who peruse the larger English papers will have seen in the latest to hand interesting articles on the widespread demand for money —for loans from the dealers in and owners of the world's accumulated capital. And this demand (says the London Daily Chronicle) "is not only from State Governments, but from municipalities; and not only from municipalities, but from public utility companies and industrial enterprises of numberless kinds. It is practically all met from only three sources— France, Great Britain, and the Low Countries (Germany and the United States having still enough to do to find their own capital^ without exporting much elsewhere). It is remarkable, on the, whole, that these three sources succeed in financing the rest of the world so well as they do; hut it is not surprising that the strain tells." Of course, the strain is all the greater when the expenditure is on unreproductive war and armaments, as it has been in the case of the expenditure of the enormous capital sums used up in the Boer war, the Russo-Japanese war, and the wars in Tripoli and the Balkans. Such expenditure leads, directly or indirectly, te impoverishment, lessened production, and increased taxation in the centres which undertake it, and also to stringency or embarrassment in the lending centres, until there are repayments in interest or principal, through renewed and increased production or further borrowings, actual or nominal, from other sources. Whenever money is thus borrowed and spent, it is immaterial where jjjfc is borrowed or spent, for it drains \he sources of supply and tends to make money dearer for the wh»le world. As the English paper already quoted says, "the accumulation of capital m England does not mean a cheapened supply of it, because it has to meet not only a horn© demand but a world demand, and the world demand is outrunning the world supply. Certain artificial barriers restricted this tendency, notably the Trustee Act; but the addition of colonial securities to the list of those in wtiich trustees may invest went far to break this down. To-day there is (in adQitien to our own trade boom, which occupies profitably an utterly unprecedented amount of British capital) an enormous demand for capital from halt a dozen new countries which are undergoing rapid

development, including not only our principal Dominions, but Argentina and 'Brazil,,' to which must now be added Russia." These aspects of the subject have been referred to before in New Zealand journals, but their reproduction from a London paper may help all concerned—and everybody in the country is concerned —to think of all the issues to increasingly better purpose. "If (says the. Daily Chro-' nicle) the Dominions resort to economy and if the trade boom subsides, conditions may in a year or two be somewhat eased for the colonial borrower. But the main explanation is to be sought in the world-wide phenomenon which Lord Milner has called the 'scramble for capital.' The world's demand for capital seems steadily and even rapidly rising in relation to the available sxipply; and the rates of interest normally expected and obtained by investors are rising also." But surely the last and ever-to-be-remem-bered word in this connection for New Zealand and the other Dominions is to cultivate prudence and foresight, borrow as sparingly as possible, and see that what is borrowed —except for paying off matured loans—is spent only on reproductive purposes, or works that' promote increased production throughout tlie country.