THE MONEY MARKET.

Star (Christchurch), Issue 12069, 26 July 1917, Page 6

THE MONEY MARKET.

VAST SUMS AVAILABLE FOR INVESTMENT.

.VARIOUS CAUSES ASSIGNED. It is no exaggeration to say that a sum of something liko half a million pounds is available for deposit in Christcmurch at call if some enterprising institution could afford to offer say, 3 per cent to the depositors. It is no secret to say that the City Council, which accepts money on call at 3 per cent as mualteruative to creating a large overdraft, has a very large sum on deposit, and a very much larger sum awaiting vacancies. This ghat of ready money must be partly attributable to the heavy local payments for the Dominion's produce purchased by the Imperial Government. Usually a verv large part of the produce would be naid lor in Loudon and the bulk of the money be invested there. War conditions have not only increased the payments to a fabulous amount, but have created a great surplus for investment.

A reporter who endeavoured to gauge the situation ascertained that there was an astounding amount of money awaiting investment for short periods, while, verv few securities were offering. The enures of this holding up of money was variously ascribed to:—

A feeling of unrest pending finanlegi station. Properties not changing hands. The high cost of building. Uncertainty of employment. The calling up of small holders.

The awaiting of the next war loan. A genera) absence of speculation, due to the times.

Tt was put forward as a theory by one financial observer that the small people ivero conserving their money, owing to the uncertainty of what they might bo called upon to face during tho next year or so. People who had tho money would not lend it for any length of time, and this must be attributed to the expectation of higher rates for money after the war, due to the increasing industrial and other activity. Tho Auckland Harbour Board's recently advertised loan at •>} l>er cent was cited io strengthen tho argument. This very attractive rate of interest was offered because the loan was for twenty years, and nobody could know what this rate might be equivalent, to after the session's taxation proposals had come down. The speaker maintained that money must rise sharply after the war. At present it was all diverted into a certain channel. "When the war was over, there would he a sudden readjustment, and everybody would want money to go into business, and launch out on expenditure, it might Ire merely an addition to a house, that had been held in abeyance durmg the war. The ordinary speculator had disappeared for lack of clients, and tho man who was content with gilt-edged socurities, finding himself with money to invest, would not let it out for more than three years. The opinion wa>j expressed that tho price of money would not come down, because those who had it were content to hold it, and there was a restricted number of borrowers. , The enormously increased price of building was submitted as another reason for the holding-up of money. While people were not building there was no need for mortgages. Although the average savings in Christchurch are extraordinarily high, it is believed that? speculation and expansion will bo dead during the Avar time. Another gentleman who is also in touch with financial affairs was not prepared to concede that investors were looking ahead to the time of dear money after the war. This in his view was crediting the average speculator with too much but _at the same time did not bear a practical analysis. He ascribed the situation to a feeling of unrest that could be expected whenever financial legislation was pending. At such times money was sure to shrink into its corners, and in any caso there was a good deal of tho sheepish follow-my-loader spirit in tho matter. The situation was an indication of over-caution, due to the changing of the ordinary channels of property and speculation. Few big farms wore selling, but a great number of smaller holdings had been put on the market, owing to the calling up of men in tho ballot. Men were ondoavouring to realise all over the place, with the usual result, that buyers stood off. Tho whole financial machine hod slowed down. The young farmer who in ordinary times had a third of tho money to pU fc down on a farm was away at the war, or expecting to go. Tho rate for small loans did not go down because that rate was controlled by the Advances to Settlers Department, which was not at present active. A third financier who was consulted, expressed the conviction that there was no other reason for the state of the market but the cessation of speculation and building. Xo small securities were offering. Properties were not changing hands, and in his view a great many people were holding their money to invest in war loans. At present a good many people wer o holding money and saving income tax.