THE MONEY MARKET.

King Country Chronicle, Volume VII, Issue 580, 28 June 1913, Page 5

THE MONEY MARKET.

REASONS FOR STRINGENCY. The prevailing stringent monetary conditions were referred to by Mr H. Beauchatnp, chairman of the Bank of New Zealand, at the annual meeting of the Banl< of New Zealand on | Thursday. He said that one leading cause wa3 the Balkan war, and the possibility of complications which had led all European Powers to strengthen 1 their financial position. The enormous expenditure to military and naval armaments, which was not confined to Europe, had abo contributed to the absorption of capital, and a keen industrial rivalry in all parts of the world involved a call for more money. Contributing causes were the higher scale of living generally prevalent, and the heavy perennial demand arising in connection with the colonisation and development of the unoccupied lands of the world. During the year 1912, the immigration into Canada reached the large aggregate of nearly 35,000 persons, showing an increase of over 13 per cent, on the total for 1911, which was itself a record year. The 'call for capital to assist in settling this large population in its new home, and to furnish it with the means of earning its subsistence, is in itself enormous. During the year 1912, nearly 47,000,000 of the new capital issues on the London money market were on the Canadian account, and over £20,000,000 on account of the Argentina. It will be readily seen how fertile a channel this is for the draining off of surplus supplies of British and Continental capital. In sympathy with the increased activity of industry, the volume of British trade shows a large expansion, the totals for 1912. has'ing reached the enormous aggregate of £1,344,169,000, the highest ever recorded, being an increase of £107,133,000 over the figures of the previous year, 1911— which was itself a record year. Since June, 1909, continuous quarterly trade increases have taken place. The "boom" in that great industry, ship building, which commenced some time ago, is fully maintained, and nothing points to an early decrease in activity. The capital issues on the London market in 1912 reached the large total of £210,850,000—an increase of £19,090,000 over the figures of 1911. The combination of adverse influences above mentioned operating at once and the same time have constituted a drain upon the financial resources of the world that has been stupendous and the marvel is not that there has bsen finiancial stringency, but that the stringency has not been more pronounced. The world's gold production shows steady expansion in recent years. In 1912 the output was the highest on record—about £97,000,000; and it has trebled within the last twenty years. Nevertheless, the growth is in no sense | commensurate with the increased credit requirements, and there is reason to fear that, at the present time, the available gold reserves, forming the basis upon which the huge superstructure of credit rests, are quite inadequate. At the pre sent time, the most persistent call upon the gold reserves of the world is from India a country which, with comparatively light external indebtedness, exports yearly a large surplus (last year 58 per cent, more than she imported), and is, therefore, in the position of always being able to command gold in settlement of her trade balances. During the last three years, India's surplus exports have amounted to £150,412.000, and her net gold imports to £71,245,000. The absorption of gold is, to some extent, due to the stoppage of the free coinage of silver by the In dian Mints, and the gradual standardisation of gold in the Indian currency by making it, alternatively with the silver rupee, legal tender throughout the Dependency; but, after making due allowance for these factors- there is reason to think that a very -large proportion of the Indian importations goes into private hoards and disappears from U3e. Mr Beauchamp said he was not without hope that the re-establishment of peace oti a firm and enduring basiß may, in the course of a few months, effect an improvement in the present situation and outlook. The restoration of confidence may bring about the release of the hoarded European millions, which will flow again into the old channels and relieve the strain; but he was not sanguine of a speedy change, a3 the settling up of the liabilities incident to the war will involve a heavy demand on credit supplies.