MR KEESING AND BANK ADVANCES.

Wanganui Chronicle, Volume L, Issue 12145, 3 September 1908, Page 2

MR KEESING AND BANK ADVANCES.

PESSIMISTIC UTTERANCES

REFUTED

THE FINANCIAL OUTLOOK

Some strong comments regarding bank advances were made at the annual meeting of the Wanganui Chamber 01 Commerce last Friday by the chairman, Mr J: H. Keesing. He said: W c should not dictate to the banks as to how they should conduct their business, but when we find their stringency is affecting, even to ruin,'-;the community, it is time we should%bV about to see if we cannot avert the calamity. I heard the other day of a family of five individuals who are" worth £89,000, and who have not a petinv mortgage. They had an overdraft cr £6000 on a property worth £18,000, an:i wero notified by the bank that they must pay this overdraft. But for an opportune incident, these people would have had great difficulty in getting that £6000. Just think what tha consequences might have been!"

Aghigh banking authority, dismissing these remarks with a "New Zealand Times" reporter yesterday, said: "There is absolutely no justiiicatior, for the charge made by Mr Jvoosiiig against the varipug. banks doing tusiness in this Dominion. In point of faol it is only necessary to refer to tho iast published banking returns io see the great increases that have taken place in overdrafts and discounts for the past quarter. The stringency whi^h osi&ts at the moment is. entirely due to tho great drop in thelyffilue.of our pvimaiv products, and it is anticipated tho re will be no real relief until" we get ihe benefit of the realisations, of our next season's wool and allied products ■•"In regard to advances: The banks generally have had such heavy demands mado upon them that at the moment nono of them are to entertain new business; that is, advances which are merely secured by assets in tho shape of real estate. . It is ur questionable' beyond the functions of a bank to keep its capital kicked up in assets of that description. It is only necessary for one to consider the cause which involved the Bank of New Zealand in difficulties some years ago to emphasise that iKiint.

•'For the legitimate requirements of traders (which, so to speak, don't inyolvo the locking-up of capital), there i?. plenty of money available, even at the present moment. People, however, who are/anxious to borrow, either for tho purchase of land or for the development ,of properties they now own will have to look outside of .the banks for their requirements. The Advances to •Settlers Department of the Government is especially helpful to small farmers, but it is the big holder who is just now feeling, the nincbu and there will be no relief for him until there, is a considerable advance in values, especially of wool. . ■'■■■'■-.

"Generally speaking, the financial position of the Dominion is absolutely sound, anil I base that opinion upon tho fact that trade engagements are well me_u ; dairy prospects are excellent; prices for stock on the hoof are remunerative and there has already been a increase in the value of wool at the last sales. Flax has an upward tendency and there is now a disposition on the part of many, buyers to fiixter into the market for forward de- '■ liveries. However, we can't look for any bis; advances in the price of that commodity until there is an improvement in the value of Manila and Sisal, which to-day, for almost the first time in the history of the .Dominion, are realising smaller prices thai} our own phVrmium tena'x." ' vHe /LATEST^ HOME ADVICES. ''^oa^wyjliyiotice ..jttst jnjo^^that: ■inia^ijji^'^dj^^ \OW- i^g^eocl^eaiEonj jjfiiii^nsn^fel:eqiaiiiA brium can ; ?ohly be"'restored' by gradually .curtailing imports and reducing .public^^'Expenditure. Roughly., it is estimated ttiat to "provide interest oh loans in London, Government, municipal, etc., there ought to be a margin of at least four million sterling between our imports and exports. ' "Judging by recent advices, public bodies will experience a difficulty in obtaining money in London except at very high rates. In this .connection it is interesting to quote from a letter written by a financier to a Wellington house under date London, July 24th last:— If anything, money is in even greater abundance than at data of our last advice, and rates both for short advances and discounts still stand at the same low level then current, namely, per cent., for day to day loans, 1 per cent, for advances for . short. periods, and 1£ per cent, for three months' bank bills. Paris has been a steady buyer of gold in this market for the past, month or two, and although there has been a slight improvement in exchange during the past few days,' it still continues unfavourable in this country. The pi'ice of gold, also, has been considerably above the Bank, of Engi land buyin" price. It is therefore vory likely that Paris/is" still a buynr of the metal. The prospect of a further reduction this year in the Bank of England rate becomes more remote as the season advances. NEW LOAN ISSUES.

"You will also be interested in this further extract from the financier's letter-—■

Notwithstanding the present abnormal cheapness of money here, the attitude of the public towards new issues, oven of the highest class, shows no sign of returning confidence. There have been during the last few weeks a largo, number or loans > but -in -few: instances have: the public : como in to airy extent, and in nearly -•■■" overy case the underwriters, have been saddled 'with, a very considerable proportion of the issues. "The lesson for .New.-. Zealand is this," remarked the speaker in conclusion, ■'That there will have to be the very greatest possible caution exercised, and people will, in the meantime, have to limit their expenditure. In other words financially, to cut their coat, according to their cloth. There is, of course, no cause for alarm, but, as I.have said, banks won't advance money en anything that means locking up capital. They want ±0 keep their reserves as liquid as possible, and confine their operations more to banking; pure and simple."