THE MONEY MARKET.

Te Puke Times, 21 June 1921, Page 2

THE MONEY MARKET.

INTEREST RATES HARDEN. '• i i, v ’• • ■■■>!■ "mm

At the annual ipeeting of the Bank of New Zealand, the chairman, Mr H. Beauchamp, made the following remarks concerning the money markets within the Dominion;

“The new conditions that have arisen have brought about a scarcity of loanable credit, with the result that interest rates have materially hardened. On firstclass security, money is not very readily obtainable; on mortgage at even 7 per cent., and Govern-, meat Bonds have recently been bought in the open market at prices which will yield the investor from 6to 6| per cent. As a consequenca of this, the rates charged on bank advances and those allowed on fixed deposits have been increased Almost im mecjiately after the armistice, the local bodies throughout the Dominion took stock of the works needed in their respective localities, and as quickly as possible set about obtaining the authority of the rate payers to raise loans for docal public works. These authorities ran into many millions, and those who were fortunate enough to go on the market in 1919 and the first half of 1920 obtained the money they required at 5| per cent. Later on it became difficult to obtain money at so low a rate, and local bodies had to offer the full rate then permitted by Statute, 5£ per cent. When this was found ineffective, the local bodies were given authority to offer 5| per cent, and, in some few recent cases, to sell debentures at such a price as to yield the investor 6 per cent. But even this rate is not attractive, in view of the return obtained from purchases of Government Bonds, and of the fact that sound commercial concerns are offering bonds at par at as high as 7£ per cent., free of income tax. ”