THE MONETARY POSITION IN MELBOURNE.

New Zealand Herald, Volume XXVI, Issue 9325, 30 March 1889, Page 6

THE MONETARY POSITION IN MELBOURNE.

In* most of the colonies, and especially in Victoria, there is increased caution exorcised in lending money, excepting for legitimate trade requirements. The breakdown of the company and land speculations of ISBS in Melbourne was, as we have before written, inevitable, if only from the magnitude of the transactions themselves. Side by side with the collapse, the spending habits fostered by heavy borrowings and overdone speculations have * greatly stimulated importation. Thus, in ISBS, bho imports of the colony reached a total of £23,97-, 134, against £19,0-22,151 in 1837, the increase being £4,919,983. On the other hand, exports in ISBS reached a total (inclusive of gold and spocie, £3,707,529) of 13,853,7(33, against £11,351,145 (inclusive of gold and specie, £1,254,548) in 1887. Imports thus exceeded exports by £10,118,371 in ISSB, notwithstanding the magnitude of the remittance of gold, against an excess of £7,071,006 in '1887. During the last three years the imports into the colony have exoeeded exports thence by £'24,524,631. Doubtless a portion of this excess is accounted for by the spending in Melbourne of the considerable profits made in squatting and mining pursuits in other colonies by Victorian proprietors. Another |x>c£4on (the largest) is duo to the borrowings of recent yoars, while a third represents overtrading. As the borrowings have fallen off of late, overtrading has increased, and it is to be feared that the private indebtedness of the colony is unusually large. In common with all the colonies (except Now Zealand), Victoria has experienced a bad season, and the crops aro short. There is next to no exportable surplus of wheat this year, while largo imports of feed grains (an important item) will bo necessary. Mining, also, is nob in a satisfactory condition. Turning to the share markets, the great fall in the quotations, of which wo gave illustrations in our issue of December last, has continued, and shares in nearly all companies connected directly or indirectly with the real property business tiavu practically become unsaleable. Finance companies have also suffered greatly. The largest finance company—the Mercantile Finance, Trusteo, and Agency Company (Limited)—has had an experience which is more or less typical of that of its competitors. This company had on 31st May last a capital of £'250,000 (in 200,000 shares of £1 5s each); it paid for tho half-year ending on that date a dividend and bonus at the rate of 50 per cent, per annum, absorbing £40,875, and transferred £100,000 to tho credit of the reserve funds. Flushed with a success which was largely due to the gains derived from transactions based on the exceptional condition of affairs, the directors determined to make a further issue, and 100,000 new shares (£1 5s to be paidup) were offered to the shareholders at a premium of £(3 5s per share, tho terms of payment requiring a total of £750,000 to bo paid up in the space of four months. The shareholders of the company took up the new issue, largely for speculation. At the time it was first, announced the shares were quoted at about £10, a price which appeared to offer a prospect of a profit of £2 10s. But neither the shareholders nor the market could stand the strain put upon them by the bulkincss of the issue, and, therefore, apart from the sudden stoppage of activity in financial affairs in Melbourne, the persistent fall in tho shares is easily accounted for.

Hanking advances are being steadily kept within bounds, but on tho other hand deposits are not coming in freely. The minor institutions anil the building societies are finding money more difficult to obtain, and are offering higher rates.

Tho existing position is naturally due to t he reaction from the excitoment and speculation of the last two or three years. Capital has been diverted from its customary channels ; largo obligations have been too lightly assumed ; there has been extravagant personal expenditure ; and tho result is a temporary dislocation of affairs. The great volume of wealth possessed by tho colony remains almost untouched, and as the liquidation of the recent speculative movements is brought to a close, unemployed money will again commence to accumulate, ultimately to find employment in, let it be hoped, sound and protitablo enterprise.lnsurance and Banking Record.