The Taranaki Herald.

Taranaki Herald, Volume XLIII, Issue 9953, 14 March 1894, Page 2

The Taranaki Herald.

PUBLISHED DAILY WEDNESDAY, MARCH 14, 1894. The London money market i 9 becoming easier every dny. The abundance of money and recovery of confidence in Australian affairs, shown by a geDeral rise in securities, is sufficient; evidence that the period of depression is on the in our sister colonies. The British "2,\ — 2i- per cent. (Goschen's) consols reached 100J on Murch Ist, the highest price known. On the same date the .Bank of England dropped its r«^e of interest to 2 per cent,, wjiich was

followed by a further decline in the open market rate for three months' bills to I^per cent. Concurrently with this state of the market for money, mainly for immediate business purposes, followed a movement-accelerating the unlocking of the stores of capital, which for three or four years past have been accumulating — reserved, in consequence of the panic from its natural outlay, in permanent investments, such as Consols, Australian and New Zealand, and other Government securities. VN c gather from late English papers that the money invested last year by the British public in new undertakings was only £41,952,000. According to the /nvest^rs 1 Monthly Manual only £177,000,000 of freah capital has been paid up since 1891, as compared with £416,063.000 in the three preceding years. It has been openly stated in the London Press that loanable capital was being locked up pending the recovery of confidence, which it is evident is now taking place. Hence Colonial stocks, in common with the consols, are rising. The reserve in the Bank of England on the first of the month was £22,522,000 : the proportion of reserve t.j liabilities being 56*38 per cent., which is exceptionally high. All this has had a tendency to cause the Colonial Stock to rise, and New Zealand 3j per cents, which in August, 1893, were at 95J, are now quoted at 99£. Now Zealand Stock is .evidently in favour just now, as it stands higher in the market than most of tho stock of the other colonies. New South Wales Stock has improved during the past six months, but the Victorian and the stock of tfie other colonies in Australia do not seem to have recovered themselves in the same manner. Never has New Zealand stood financially in a better position in the London money market than she does at the present time, and were not the policy of the present Government a '■ nonborrowing " one, the present time would have been an excellent opportunity to have gone to the London money market for a loan. However, it is not the Government of the colony that wants the money so much as the settlers, who are restricted in their operations by the banks. As a Melbourne paper, commenting on this subject, says: — "There is no lack of money in the country, although it is not obtainable at reasonable rates, for oiling the wheels of industry, either in town or country. According to the banks' statements the coin reserves of the colony at the close of the last quarter, amounted to £8,245,212 as against £4,230,618 for the corresponding quarter of JBBS. How does this account for the fact that the trader or manufacturer cannot obtain advances for lesa than 8, 9, or 10 per cent, and only at all to a very limited extent j and the farmers have been thrown into the hands of the usurers, who simply absorb the fruits of their industry ? ' It is very much the same in New Zealand ; the restriction of capital is causing farmers and manufacturers to curtail their operations. It is true the country will still go on and prosper, but its natural resources will take a longer time to develop. The restriction of capital has had something to do with the slight falling off in our export trade during the past year, and this, no doubt, is the reason the Government are thinking of turning money lenders themselves. If private capital was plentiful at a low but fair rate of interest, there would bo no need for the Government to inter! ere; but such not being the case, the Ministry proposes to apply in New Zealand the Credit Foncier System, wlrch it \is , stated has operated very beneficially in France and other European countries. As the Melbourne Leader says : "We have seen that there is abundance of capital lying idle in the banks, and if the savings of the people were invested in reproductive works it would be better for the investors and better for the country. A great Credit Foacier company, operating under a State guarantee, could offer a safe investment for capital and provide the farmers with money on the security of their land at a low tate of interest, say 4;i or 5 per cent., with the principal repayable over a lengthened period, so that the mortgagors would be relieved from the dread of an early foreclosure. The company would have no interest in the mortgages being terminable at short dates, since the investors would hold debentures negotiable in the open market, and could sell out when they pleased without any disturbance of th? relations between the company and its debtors." It is this 'system, no doubt, that the Government intends to initiate in New Zealand, and which will cause the country to prosper far better than borrowing money for public works which are non-productive.