THE PRICE OF MONEY.

Lyttelton Times, Volume CXVII, Issue 17198, 19 June 1916, Page 6

THE PRICE OF MONEY.

A passage in tlie Financial Statement indicates that Sir Joseph AY ai d proposes to take rather drastic measures in order to prevent the export of capital and to keep down the price of money. In spito of the abundance of money rates aro showing a tendency to jump, mainly, of course, because of the uncertainty of tho international conditions. In these circumstances tho Finance Minister has every reason to claim that the course followed by the Government, without any ostentation, has had a useful steadying effect. The control exercised over tho borrowing of local bodies, for instance, lias unquestionably proved to be wise statesmanship, while tho policy pursued by the State lending departments has operated in tho same direction. Sir Joseph Ward does not intend to rest on these measures. While Cabinet has hesitated to attempt anything in the shape of legislation controlling prices, tho Finance Minister boldly announces his intention to control tho price of money, and legislation will bo submitted to Parliament to prevent a general increase in interest rates and to restrict the rates that ruaj be paid on deposits. Having regard to the amount of money apparently available for investment in the country this measure should' entail no real hardship on investors. If the bank returns may be taken as a guide thoro is ample capital in the country to meet all reasonable requirements, and the question to which Sir Josepn AYard has given his attention is whether the holders of money ought to be permitted by reason of tho disturbed political conditions to exact a larger rate of interest than ■would bo warranted if tho country were not at war. Plainly the step ho proposes to take is drastic, but it is certainly less drastic than some of the financial measures adopted by tho Imperial Government, and whatever economic objections may be raised we do not think that tho Minister will have any difficulty in meeting them on broad grounds of public policy. To support this policy of controlling the price of money Sir Joseph is prepared to go to the length even of prohibiting tho export of capital. It is not proposed to interfere with the ordinary trade transactions, apart from the trade in money, of course, and in view of the heavy balance of trade in favour of the Dominion there ought to be no necessity for tho transfer of money from this country abroad. AY T hat Sir Joseph AYard has in mind, no doubt, is the prevention of the transfer of capital as a result of the restriction of interest rates. The subject is not one, that wo can dismiss briefly, with simply a. word of approval, but our present intention is only to direct attention to tho importance and boldness of tho proposals.