WELLINGTON NEWS

Hokitika Guardian, 19 January 1932, Page 3

WELLINGTON NEWS

BED ROCK REACHED

Special Correspondent,

WELLINGTON, January 16

There is not wanting evidence that the world ha s reached the bed-rock oi bad times, but that does not mean that all countries have completed the disagreeable business of readjustment, and New Zealand is one of these countries. What evidence can be adduced to sup port the claim that bedrock has been reached in the world’s principal market centres P Let us first take the London Stock Exchange and the London money market which are very closely related. The Lon don/Stock Exchange is an exceedingly sensitive barometer and responds speedily to political and financial happenings.

Very recent reports from London have stated that gilt-edged securities have firmed, even German and Austrian bonds have improved. The improvement is said to be due to the growing optimism regarding the Lausanne Conference, which is fixed for next Monday, to deal with German reparations. The very astute members of the Ttoiuioi; Ovuck exchange have sized up the situation and are satisfied that a favourable result will follow upon the deliberations of the Conference, such a result as will stimulate and revive confidence. More confidence will mean more business.

Then again we have the fact that the “Big Five” banks in London have maintained their dividends, except the Midland Bank, which has made a small reduction. -The Big Five with others constitute the London money market,

which is still the best" in the world as regards turnover, technical equipment, tradition and experience. That the five banks have been enabled to continue-thrir dividends is striking proof that London is still the world’s monetary centre, notwithstanding the departure from the gold standard. Coming nearer home we find ;the Commonwealth of Australia is on the road to recovery. Australia has struggled lor two years against almost insurmountable obstacles to put her house in order, and now sees prospects of obtaining the objective. The Labour Party and “Langism" have been the chief obstacles, but they are practically out of the way now and the current year should see Australia in a very good position.

We have not suffered nearly as much as the people of Australia, nor have we been called upon to make as huge sacrifices—perhaps that has to come—and we will know all about it in the course of a few weeks. Australia was shitt out of the London market long ago. We were ■ still able to raise £4,000,000 on Treasury Bills, although we had to pay a pretty big price for the privilege. Australia lias been obliged to carry on without borrowed money and that is to be our fate this year.

The Government has received very definite information that a loan in London this year cannot be raised, and for that reason the Government has arranged with the banks to have the first call on .Loudon Linds to the amount of £14,000,000 to meet interest and other obligations in London. We are merely following in the footsteps of Australia. 'We must go through the same turmoil and troubles a,s our neighbour before we see ihe signs of recovery. In effect we have not touched bedrock because we have not completed the necessary adjustment and adaptations.

Other evidence that bedrock has been reached in the Northern Hemisphere is supplied by the commodity markets. YVi.h some lew exceptions all commodities are swinging within narrow limits. The rises and fall s are not very pronounced. They have reached bedrock and presently will move upVvards. Wool, in whicn New Zealand is very much interested, shows a very insignificant downward trend. As a matter of fact at the 'London December sales prices for crossbred wool were a shade better than they were a ■ January sales last year.

...,tain will soon have her trade regulated and there is + l '-' solid fact that there has been a progressive decrease in unemployment in t he Old Country. It is hazardous to make any prediction as to the immediate future, nevertheless the indications at file moment point to the probability that by the end of the first half of the year world economic conditions will show signs of betterment, in other words the world moves very slowly but very surely towards prosperity and good times which the rising generation will know how. to value.