TIGHTENING MONEY MARKET

Dominion, Volume 7, Issue 1901, 8 November 1913, Page 3

TIGHTENING MONEY MARKET

EFFECT ON COST OF LIVING. AUSTRALIANS' SPENDING HABIT. Mr. Justice Heydon, of the Now South Wales Industrial Ctfurt, in his inquiry into the cost of living last week, expressed interesting views on the tightness of the money market and its effect upon the shortage v of houses. ■ He suggested that the shortage of houses might be due to tho shortage of money. Possibly people were getting such a high rate for their money in other directions that' they, were not disposed to build. The spending habit of the Australian appeared to bo punishing him. Mri Connington (who is appearing foT some of the union* and union secretaries) said that there seemed to have been an artificial tightening of money. Mr. Justice Heydon: Perhaps the banks have not forgotten the years 1892 land 1893, when suddenly confidence collapsed. There may bo a boom _ on now, or the beginning of it, and it is necessary to prevent that. The banks' business is to lend money, and if they can lend it safety I can hardly understand any artificial motive preventing them from doinu it.

Mr. Connington: Looking at tho thing fairly and squarely, one might think that was so; but what if the banker finds it more to his interest to keep his money from investing, with the idea of getting higher Tates? Mr. Justice Heydon: Then, too, the banks had lost the power of issuing notes, this having been taken over for tho purpose of meeting the Commonwealth's necessary expenses on publio matters requiring money. That would contract tho amount of roonoy available by tho banks for lending. Then they looked for deposits to lend, and there has been keen competition for doposits. Building societies are coming in again, I am sorry to see. Building societies, by borrowing money, brought on the crisis of 1892.