THE SLUMP IN THE MONEY MARKET.

Dominion, Volume 6, Issue 1770, 7 June 1913, Page 4

THE SLUMP IN THE MONEY MARKET.

The financial disturbance in London, regarding which cable messages have been sent to the colonial press during the past few days, is obviously a very serious matter, but none of the messages indicate the origin of the trouble. At one moment

it would appear to be due to weakness in London, at another New York seemed to be the storm ccntrc, and then there is a suggestion that Germany is the cause of the trouble. The fact, however, is that owing to the excessive demands for credit, and the keen competition of borrowers, money has become increasingly dear, and each fresh issue at a high rate discounts those previously made. The underwriting houses in all the monetary centres are holding large blocks of securities for which there is at

present no market. The money mar-* ket has been in a state of nervous tension, and in a condition to develop into a panic on the least provocation. The first burst camc apparently at the fortnightly settlement of the London Stock Exchange, when two jobbers announced' their inability to meet, their engagements, and although their ipinfc liabilities

aro comparatively small, the market appears to have taken alarm, and with that every adverse feature at Home and abroad has helped to increase the weakness. Tho position is a very unpleasant one, because of tho fact that enormous sums are still urgently wanted by European nations for their new defence schemes, and by the Balkan Allies to make good the losses of tho war. The withdrawal by Germany of £1,700,000 in gold from London during the past fortnight is given as one of the reasons for tho slump. But the market knew some time ago that Germany would require the metal, and yet the Bank of England discount rate <vas tho other day reduced from 5 to per cent. The slump is duo to the general weakness, caused by overloading of underwriting houses, excessive demands for credit, prospective heavy borrowing on tho part of European. States, the huge demands of legitimate trade, the provision for crop movements in the autumn, and the near approach of tho close of the quarter. _ The situation is electrical, and it would not be surprising if there are some very important insolvencies.