The Dominion. FRIDAY, OCTOBER 25, 1907. LAND AND LOGIC.

Dominion, Volume 1, Issue 26, 25 October 1907, Page 4

The Dominion. FRIDAY, OCTOBER 25, 1907. LAND AND LOGIC.

New York has provided the world with a series of financial shocks, each succeeding sensation being more severe and far-reaching than, the one precedjihg it. . The' year opened .with Wall Street securities at a high level, but in March there was a collapse of some magnitude, and we have had notice of several since then; as a matter of fact, stringency has been tll6 dominating feature of the New York money market for months past. The depreciation 111 securities is to 'Various causes, but, as we showed in a previous reference to the subject) the ( shrinkage is the natural reaction of over-capitalisation, . and tho other evils inseparable from boom times, lip ' to August last the shrinkage totalled a very considerable sum. Compilations to show the shrinkage in security values from the high prices in January, lfiOT, to the low prices in August, 1907, prepared by Chandler Brothers and Company of Philadelphia, disclose the fact that the aggregate shrinkage in the securities listed on the New York, Philadelphia, and Boston. Exchanges totalled 3,074,268,000 dollars (say £614,853,600), and' Government and municipal bonds are not included in : the list. Messrs. Chandler Brothers and Company express the opinion .that the total depreciation in values in the'seven months has been over 5,000,000,000 dollars (say £1,000)000,000). _ This shrinkage has had'its effect in the United States: there' have been many failures ' of small banks , and trust companies, arid several members of the Stock Exchange have been hammered. The collapse of tins week is the most severe of the _ series, for it has caused the suspension of one of the largest and most^ influential of .the trust companies of Now York. So far the money panic of America has hail no concern for us, but the position is now serious, and the effects are sure to ( be far-reaching. A message received by the. Bank of New Zealand from its London office is certainly reassuring, but the world's monetary headquarters cannot' possibly escape feeling some of, the effects. America is certain to and _ obtain funds from London, and, while the American financiers may.not be able to pledge their railroad and similar securities, they have other . resources., First of all there is wheat. America' has an export-able surplus, and, ' furthermore, the carry-over from the 1906 crop was 6,000,000 ; quarters greater than in the previous year. The London quotations for wheat and flour are high enough to attract imports under normal financial conditions. . Then what must be .the case, now when America is iri urgent need of credit. High prices not only cut, down consumption in the United States as in other countries—thus increasing available supplies for export—but .draw from hidden granaries wheat, the existence of which had . been unknown to the trade. Wheat will be rushed across the Atr lantic for sale in England, and the same course will be pursued with respect to cotton,. meat products and manufactured goods. The prices of such commodities • must, under _ such circumstances,* decline. There is another feature' that strikes us more directly. The Americans have been strong buyers of Australasian wool, and not'a'little of the strength of the market arid the advance in prices is due to their operations. It cannot.be expected that -they will be such eager, reckless buyers as in the past, and without their support values will receded ; Thus it cannot lie said that the New York financial crisis will not be felt outside : of America. It will be felt immediately in the countries having close financial .relations with New York, and London must be one of the first placed to be affected. Money will harden in London. The weekly meeting.,of the Governor and Court of the Bank of England . should have been held yesterday, and there is good reason for anticipating au advance in the official minimum discount rate. A 5 pc/r cent, rate is almost a foregone con-

elusion, and if it does not go above that before Christmas v.'e may consider ourselves ( fortunate. Many of the Australian banks have, we hear, drawn upon London. These banks have had about twenty millions sterling in the Metropolis, and this money is. being withdrawn by telegraphic transfers. The banks in the Commonwealth and New Zealand must make preparations for financing the. woolclips and the shipments of produce. The outlook is unpleasant, and further developments will be awaited with keen interest.