TRADE IN VICTORIA.

New Zealand Times, Volume XXIX, Issue 4139, 26 June 1874, Page 3

TRADE IN VICTORIA.

[From the Melbourne Daily Telegraph.'] The present dulness of trade and the increasing tightness in the money market, are becoming matters of everyday comment. Various are the reasons assigned for this change in commercial affairs ; overtrading, heavy stocks, depreciation in the value of wool, mining losses, and the transfer of investments from Victoria to other Colonies, have been mentioned as the causes leading to the present result. A practical solution of our present monetary position may, however', be found by examining the first four, and here wo are met with the inconsistency existing in the disproportion between traders and producers, inducing ruinous competition, particularly in small businesses. A glance at the bank returns for the decade shows unmistakably that our demands for credit on these establishments have increased too rapidly not to meet with the usual result of a sudden check. The same was experienced in 1869, when our loans and discounts increased from £12,358,000 in 1868, to £14,330,000 in the succeeding year. This resulted in a contraction, and in 1870 we find the amount reduced to £13,474,000, or about a fair average increase for the two years. In 1872 our discounts andadvances stood at£13,600,000, but advanced in 1873 in the same ratio as in 1860 t0£15,883,000. Trade during the last year was unexceptionable good. No failures of any importance took place to disturb the even run of commercial relations. The returns of the stockowner and farmer were highly remunerative, and speculation was greatly stimulated, hence the expansion of business, and the increased demands of traders for bank accommodation. We opened 1874, however, far differently; our principal export, wool, showed a decline in value of fully 2d. per pound on the prices obtained at the opening of 1873, thus reducing our credit drafts on that one item alone over half a million sterling. The good harvest of 1872-3 enabled us almost for the first time to supply our local requirements from our own crops, and to export also a small amount; 1874 commenced with heavy importations of wheat and flour across the Murray, whilst from the anticipations that our wants were greater than our supplies, prices ruled high; and, consequently, the payments on our side were larger. Further, we opened the present year with anticipations and preparations for doing a large trade with Eiverina, for prior to the adoption of a new fiscal policy by New South Wales, our merchants had made the usual arrangements to continue what had for some months been a large outlet for our stocks. We know how these expectations failed of realisation, and hence our bonded stocks at the present time are larger than the actual requirements of our trade, and the restriction at the moment of bank accommodation, either by withdrawal or advancing the rates of discount, hampers and disturbs the ordinary progress of business. The demands on the banks have certainly produced a greater note circulation. The last quarter shows an increase of something like £26,000 over the former, but the bullion assets have declined about £20,000. Our exports of gold, both in coin and bullion, to Europe, during the last three mouths, have been large when compared with the decline in the actual receipts from mining operations, but this increase has been necessitated to make good the deficiency on our wool bills, which, as we have already shown, must be considerably under the amount realised during the previous year. We cannot avoid the fact that the depreciation of mining securities has tended in a great measure—coupled with other circumstances already mentioned—to produce much of the present dulness in our country trade. The constant demands made upon all classes for contributions towards non-dividend paying mines have been seriously felt since the opening of the year, and although in the Sandhurst district, from which the greatest complaints come, the dividends paid show in the aggregate an excess over calls made of £97,637, still the fact that the distribution has been sadly unequal supplies the reason for the depression which has resulted. We cannot dismiss from the consideration of the causes of the present tightness in the money market that the realisation of large freehold properties, both in the metropolis and in other centres, during the close of the year 1872 and throughout 1873, covering as they did over a million sterling, most of which has found investment elsewhere, has something to do with the present derangement of our commercial finance. The real effect of transactions such as those referred to is not felt at the moment, but becomes perceptible enough when surrounding circumstances necessitate a further demand for capital, which is __ not forthcoming from the reason of its foreign absorption.