THE FINANCIAL BAROMETER.

Otago Daily Times, Issue 19980, 23 December 1926, Page 6

THE FINANCIAL BAROMETER.

NEW ZEALAND’S CREDIT HIGH. PROSPECTS BRIGHT FOR 1927. The financial barometer during the past year has stood at steady, with a declining tendency which has not been noticeable to any great extent. Money, while not being over-plentiful for general investment purposes, has been obtainable at reasonable rates of interest for any safe business proposition. Fortunately, New Zealand’s credit stands very high in London, and also in other parts of the world, and in consequence the requirements of the Government and the various local bodies during the year have been negotiated on terms advantageous to onr Dominion. There is no doubt that the general strike in England last May, and the long-drawn-out struggle in the coal industry, have had *a farreaching effect. Goods required for development purposes in New Zealand have been held back, and the consequent holding up of various works was one of the main causes of the rather serious unemployment crisis experienced last winter. A further result of the coal stoppage has been that the number of immigrants to New Zealand has been largely increased. Still, although the conditions generally in New Zealand have not been as buoyant as during the previous year or two, the immigrants as a whole have been successfully absorbed. There were during the year rather serious reductions in the prices obtained for the bulk of our primary products, and in consequence the finances of our large farming population have been somewhat straitened. It is, of course, generally conceded that our farming lands have been over-valued, and there has been an all-round drop of probably 20 to 30 per cent, in the market value of farm properties—more particularly in regard to agricultural and mixed farm land. Financial experts are agreed .that some improved scheme for relieving the acute financial difficulties of farmers should be propounded, and it is gratifying to know that the Bank of New Zealand purposes inaugurating a farm loan department for giving assistance to farmers on long term mortgages similar to those made by the Advances to Settlers’ Office. The rate of interest to be charged on advances by the Bank of New Zealand will be 6 per cent., and this will help to stabilise the rate of interest on first mortgages. During the year the rate of interest on first mortgage securities has been steady from 6 per cent, to per cent, in the Otago and Southland districts, but it has been distinctly evident that during the latter portion of the year there has been a lack of money for investment on mortgages, and consequently there has been a slight tendency to an upward rise in the rate of interest. This may mean a slightly increased rate than has been ruling for the past two or three years. In addition to money obtained from abroad, a great deal of money has, during the past year, again been obtained on the local market by local bodies in their debenture issue at from per cent, to 5f per cent. The opportunity given to the investing public to take up short term debentures has appealed to many investors. Possibly, this is largely the reason why money for investment in mortgages has not been over-plentiful The scarcity of money had also reflected itself in the share market, which at the end of the year is weak. In our own province of Otago there has been somewhat of a revival in the gold-mining industry, but it is not altogether safe to predict that this will continue. The prospects for the incoming year are reasonably bright. The general opinion seems to be that the price of our primary products will improve rather than decrease, and that the settlement of the in--v dustrial troubles in the Homeland will have a decidedly beneficial effect on financial conditions generally in New Zealand.