THE MONEY MARKETS.

Otago Witness, Issue 3123, 28 January 1914, Page 12

THE MONEY MARKETS.

SIR JOSEPH WARD’S VIEWS.

(From Oor Own Correspondent.)

WELLINGTON, January 23.

Sir Joseph Ward gave a Post reporter an interview to-day on loans and borrowing generally, having special reference to the easing of the money market in London as indicated by the over-subscription of the Victorian loan.

“I am not in the least surprised at the position disclosed in connection with the recent Victorian loan,” said Sir Joseph. ‘‘ I have held all through, and have expressed myself so on more than one occasion, that it was ridiculous to suppose, with the large accumulations of money going on in the Old Country, that by any unnatural or forced processes a rate of interest higher than the normal one could be maintained for long, and it shows the advisability of this country not rushing into long-dated loans at a heavy cost to the country. For instance, if the 70 millions of money that the French contemplated raising a short time ago had been put upon the market, the great bulk of it would have been subscribed by French investors, and it would scarcely have appreciably affected the London market, excepting so far as investors could temporarily use it to try and get the best rates they could in other directions. 1 repeat what I have so often said, that the ordinary accumulations of fresh moneys for investment through the London Stock Exchange varied between 300 and 400 millions a year, and no one who has studied the fluctuations of the London money market for the last 25 years can do other than recognise that the knowledge of the principal investors, or, rather, the important channels through which investments are made on behalf of small investors, does not make them realise that they cannot get their investments out if they attempt to keep up a higher rate of interest than can induce those wanting money to relieve them of the enormous annual accumulations that are going on. The Continental countries have, of course, in recent times had a disturbing effect upon the financial world, because the most experienced statesmen and diplomatists m the Old Land were uncertain as to where it was going to end or what developments might take place. This uncertainty _ has passed, and but for the feverish activity going on in a few of the principal countries of the world in the matter of buildinrr ahead for naval purposes, money would come back to a lower rate than has been the case for the last few years. How far the change in the London money market can affect the money market here is not easy to forecast. That depends upon circumstances, which obviously to the people of experience in this country must have a material effect upon this important matter here. There is one thing quite clear to my mind —namely, that care should be exercised in not committing New Zealand in its public loans over too long a period of years. The more so, of course, if a high rate of interest has to be paid for our” loans. It is quite clear to my mind, as it must be to others, that the higher the rate the country pays, the higher the average rate that will prevail for ordinary investments in New Zealand, and that, of course, adversely affects business of all kinds.”