"FRENZIED FINANCE."

Dominion, Volume 6, Issue 1686, 28 February 1913, Page 3

"FRENZIED FINANCE."

WORDS OF WARNING,

EFFECT OF THE MOTOR-CAR. (By Telceraph.—Sjcoial Correspondent.) Auckland, February 27. . Somo trenchant criticism concerning tho disposition towards "frenzied finance" was indulged in at the annual meeting of tho Chamber' of G'onimerco : this afternoon by tho retiring president (Mr.- G. Elliot), There was a growing inclination, he said, on the part of many firms and limited companies to run and increase their businesses on loans from private individuals nt call or on deposit tor fixed periods. The banks, ns members of the Chamber were aware, were compelled by law to keep a gold reserve of about 20 per cent, of the total amount; deposited with them, and somo kept .as much as 33 1-3 per cent'. There were occasions when firms were justified in taking loans or deposits when it was good business io do so, as in tho caso of companies wlwre' they had sufficient uncalled capital' to meet their loans or deposits, or where they had other first-class securities which could be called up or realised on nt short notice. Otherwise, however, tho practice was dangerous in • tho extreme, dangerous to the firm itself and dangerous to tho depositors. Many depositors in such cases ns those considered tlicy had a preferential claim over other creditors in cases of liquidation or bankruptcy, and comforted themselves with this idea. Such, however, was not tho case, as deposits only rankell equally with all other ordinary creditors in the. distribution of liquidation dividends. . Notwithstanding all the warnings uttered by tho press and by responsible men, continued Air. Elliot, there seemed to bo littlo inclination on tho part of citizens generally to curb extravagant expenditure. Tho introduction of tho motor-car had, iho thought, don© much to encourage individual extravagance, and had been a factor in increasing our imports very largely. , Within recent years something liko .£3,000,000 had been spout in motor-cars nnd motor-cycles throughout fho Dominion, without taking into account tho largo and recurring amounts for spare parts,, tyres, oil, > benzine, or spirit. In tho inarch of civilisation tho niotof wiis replacing tho horse, which wjis bred in tho country, tho vehicle drawn by tho horse, which was built in tho country, and the feed for tho horse, which was grown in tho country. While not condemning the motor-car, he was satisfied that its importation and use assisted in upsetting to somo extent for tho moment our financial equilibrium. I In . passing, added Mr.. Elliot, it was interesting to note that Great Britain was 1 tile •principal creditor nation of the i world, and her investments outsido Brit- ,' ain exceeded ,£3,800,000,000, while her annual inoomc from these investments. was estimated.at .£180,000,000. Sho had over .£400,000,000 invested in Australasia alone. Money could always be obtained in this financial centre, provided tho sscurities offered were sound, and the rate of interest sufficiently attractive. Tho prices of money had, becto extremely low—competent judges considered too low—for many years, but, owing to the enormous development taking place all over the world, and to tho industrial prosperity now being esporieuccd iu Great Britain if-self,. New. Zealand's Finance Minister. (Mr. Allen) liad had to pay a rate of interest for his loans wlncli, n few years ago, would have seemed exceedingly high. Leading financiers held that the price of inoney was likely to remain high- for many years, and some asserted it might never ,como back to . tho lovel .obtaining, say, somo eighteen months ago, ; as price of commodities ih>s rising all over tho globe. It.was to" be assumed that tho price of !money was also 1 rising.