MONEY MARKETS

Rangitikei Advocate and Manawatu Argus, Volume XLV, Issue 12084, 22 June 1920, Page 5

MONEY MARKETS

The Chairman of the Bank of New Zealand, at the annual meeting, made the following remarks • All borrowers, both Government, public and private, must ne prepared to pay higher rates for future accommodation. The fairly certain contingency of higher future rates should prompt a very careful scrutiny of the circumstances surrounding ail contemplated underwhatever their nature may be, involving the employment of borrowed capital, in order that wouldbe borrowers may first satisfy themselves that the project in hand is likely to prove sufficiently profitable to justify the heavy handicap which the cost of the necessary capital is likely to impose. In the case of Government undertakings, it is important that the authorities should be on their guard to resist any political pressure designed to force them to embark in ventures which could very well be left to private enterprise. The Prime Minister, the Right Hon W F Massey, has, on more than one occasion, urged the necessity for economy, and the injunction cannot be too strongly emphasised at the present time both as regards public and private expenditure of every description. Uj fortunately, the public does not yet appear to have' appreciated this necessity, because expenditure of every kind continues for the most part on a 3 lavish a scale as ever. But in this respect New Zealand is not singular nor by any means the worst offender. The whole civilized world has been indulging in a riot of extravagance, and the reckless outlay has contributed to feed a flame whieh, if not quenched, may shortly develop into " a conflagration which may threaten the very foundations of ordered civilization. It will be noted that the Minister of Finance has just issued the prospectus of a Government Loan of two millions, with a currency of ten years. The issue price is to be par and the rate of interest five per cent, subject to income tax. The Minister further intimates that another loan, of considerably larger amount than this, is practically certain to he offered locally before the end of this year. The Minister of Finance is, I believe, wise in not endeavouring to obtain his requirements in Britain or elsewhere outside the Dominion; such borrowing if practicable would at present be unduly expensive.