THE MONEY MARKET.

Poverty Bay Herald, Volume XL, Issue 13259, 18 December 1913, Page 8

THE MONEY MARKET.

TIGHTNESS OF THE MARKET. REMARKS BY BANK OF NEW ZEALAND PRESIDENT. i (Special to Herald.) ! WELLINGTON, this day. j At the half-yearly meeting of the Bank jof New Zealand to-day, the chairman : (Mr Harold Beauchamp) made the i'oi- ' lowing interesting remarks on the mone-' j tary situation : — When I last had the pleasure of adj dressing you, I reviewed at some length | the financial situation and outlook, and i remarked that I was not sanguine of an j early return to easier monetary condi- '■ tions. The views I then expressed have I been justified by events, and the tight- ! ness m the market tiieu prevailing still j continues. The Bank of England rate, j which had been reduced to 4_ per cent., was raised again on 2nd October to 5 per cent., at which %urn it still stands. The rate of tlie Imperial Bank of Germany is 5_ per cent., and that of the Bank of Fra.nce 4 per cent. You will thus see that the dcarness of capital is not confined, to London' alone : it is tiie condition of the whole commercial world, and it is safe to say tliat there is little prospect of money becoming more accessible on easier terms. The enormous expenditure on armament? shows .no sign of diminution, notwithstanding the drain on capital thereby created; but one of the greatest causes of the continued clearness is the demand from all countries fo* development puri poses. The moment there appears to be i the least relaxation of tension, the market is flooded with applications for loans i literally from every quarter, of the globe. We cannot, therefore, expect ' to fine a very free market for our municipal anc" • other loans. This bank has been en trusted with the negotiation of a large s total of such, to be placed as soon as , circumstances admit, but the . prospects of favorable flotations, for the reason; > already stated, do not seem at all on [ couregtng. There is, however, . little . doubt that money m reasonable amount: i can be obtained, provided that the bor > rower is prepared to pay the lender's -, price. We shall have to choose the most . favorable moment ,to approach the mar r ket ; and, as the unexpected sometime- . happens, we may perhaps hope that il } will occur m our near experience, ii i which case, it will certainly be grati i tying. Owing to the stringency during the i whole of the half-year, we have effecte* } no loan flotations m "London for anj T local ■ bodies during the period. The . market has latterly been m a most pessi 5 mistic mood, and those corporation! . whose finances would not admit of post 5 ponement of their applications have hac I to submit to onerous tex*ms m order te . raise the funds they required. , The general investi*n^» publio appeal r to be shy of oversea securities, as the . greater part of colonial municipal and other loans floated during the half-yeai I has had to be taken by the> underwriters who at one time became so heavily load^ j ed with stocks that they had to call r , halt and absolutely decline to considei , any further issues until they had beer \ able to dispose. of a reasonable proportion tion of their burdens. , With conditions as they stand to-day , I am bound to recommend New ZealaiK local bodies, having loan issues m pros . pect, to postpone any action m the ' meantime, and to avoid making any com mitments for outlay. The New Zealand Government placec [ a redemption loan of £3,500,000 at A , per cent, m October last, m the shape I of 10 years debentures convertible intc inscribed stock at £101. The issue price was £98 10s. In this connection it i.< ! interesting to note the terms on whicii ' other recent colonial Government loam ' have been floated :— New South Wales £3.000,000 at 4 per cent, m March. ' 1913, issue price £98; New South 1 Wales. £1,500,000 at 4 per cent, m ; August, 1913, £97_; Victoria. £2,000,---000 at 4 per cent, m September, 1913, £98; Canada, £3,000.000 at 4 per cent. In September, 1913, £98; West Austra- ' Ha, £1.000.000 at 4 per cent, m November, 1913, £97; Canada, £4.000,000 at '' 4 per cent, m December, 1913, £97. It will be seen that the New Zealand Government- was able to obtain for its ' loan the highest price of the year. All things considered, therefore, the Government of this Dominion may well be con- ! gratulated on the sucoess of the opera- ■ tion. Turning now to the more local aspect of the matter jind the money supply on this side of the world, we finel that Australia is anticipating a- good season, and rates for money art; said lo be weakening there somewhat, lenders hoing prepared to advance/ on mortgage at fully •one-half per cent!, les*-* than they were demanding a few months ago. In New Zealand the season, owing tc the excellent winterf promises to be perhaps the most bountiful ever experienced, and as prices are, on the whole, good, the net yield should be. most 1 satisfactory. In point of fact, I anti- ; cipate that at the on<l of the current , produce season, covering a period o! twelve months, oui' total exports will approximate £25,000,000. Both m Australia and New Zealand, however, .monetary ease resulting from the excess, of exports is not likely to be experienced to any great extent, because] 1 though exports have largely increased. 1 imports have increaseel m even greatei ' ratio. For permanent relief, therefore, ■ we can look only to the central market I of tlie world, and un«il London money ' becomes definitely cheaper, there seems small prospect of much ease m the Dominion.