MONEY LYING IDLE

Northern Advocate, 12 October 1934, Page 4

MONEY LYING IDLE

■ ' While a large section of the people of the Dominion have no money to place on fixed deposit in a bank, and therefore are not concerned about the matter, it is interesting to hear that some who have money are unable to find a bank prepared to accept it save as a free deposit. This inability to secure investment is an eloquent testimony to economic conditions existing generally. It is interesting, in this connection, to read what the, Sydney correspondent of the “Evening Post” has to say about business and production difficulties in Australia. According to the writer, are being accumulated more rapidly than they are being invested in capital undertakings. Interest rates' have fallen to the lowest points ever recorded in Australia. Yet the funds are not absorbed. In part this is due to the shaken confidence of the investing public. Having suffered losses they will not take further risks. They prefer losing interest to risking the loss of capital. Thus there has been a reversion to hoarding—not. in the old form but in the modified way of allowing the banks to hold the fund. The Australian economists say, however, that, to absorb the funds now, justifiable enterprises must be. found, and for this further reductions of costs and increased efficiency are necessary; There 'is an alternative method, the logical method, and that is the transfer of debt from overseas to a local domicile. That would relieve the burden on Australia and-New. Zealand and enable the primary producing countries to meet with less embarrassment 5 a reduction in returns from overseas sales. But against this, says the •“•Post,” there is one overwhelming objection; The redemption’ of the overseas debt would, involve, payment of exchange on the capital—repaying £5 for every £4 borrowed. Until exchange falls, therefore, the countries with accumulated savings must concentrate on efficiency and cost reduction —and perhaps it will not be untimely to see whether the excuse that interest is the trouble is correct. It is possible 'that the blame on interest has sometimes been a screen to hide inefficiency.