MONEY IN PLENTY.

Dominion, Volume 7, Issue 1992, 24 February 1914, Page 6

MONEY IN PLENTY.

TURN OF THE TIDE*

PROSPEROUS PERIOD AHEAD.

"Since the ' second ' week in January money has been cheap in London, and the easier conditions revealed themselves with a suddenness that perplexed rnany, an. economist, amateur and professional.-,■■;.' So far, however, tho easier conditions'hare 'hot'been manifested in New Zealand, and it was to find out ,'. when' we may expect to so© tho. mone•i tary' Tates lowered that' a reporter prpsecuted, .inquiries among business men who keep in .touch with financial affairs. One gentleman conversant with the position,, pointed out that it was ■ too soon to expect London conditions to be reflected in New Zealand. During ', the American financial, .of 1907, when the bank rateiWas' forced tip to 7 per cent.,; no change was made here, .and it was not until, some time in 1908 that we felt tho strain. ■"■ ; -It seems,* however, thatwe'will not have- to;wait very long. Probably in April or May ,a ! change towards easiiless'.will become perceptible, and from then onshore '.will be "an abundance or money in ;New,', Zealand. ■ This will he caused, partly; by, tho loans; raised in London, -and partly by the high prices ruling for- New-Zealand produce. The loan recently raised by the Government is ; for development purposes, for the Pfime .Minister, told, a Dominion reporter, and,'tho fact was published that "the greater part of the amount raised by this' loan" (£4,500,000) will'be required for development, ■;■ and' for tlie requirements 'of the, lending • Departments'. '•'... It is difficult to; say what amount of. this loan is -.required' for the' purposes indicated by' Miv Ma'ssey, hut if it';.is assumed' -to'be about £3,000,000,; _that estimate) may not be far out.' _ With 'the loans issued by the local bodies;' there will be available the following:—- .-■■'• '-. ■'■'■£ , Government loan .; '-3,000,000 Auckland ; City-loan. ..:';.■...... 224,500 Cliristchurch electric loan ... 100,000 IWaipori electric loan ...;...... 150,000 ■'~., Total 3,474,500 . 'Thus, practically three and a half millions sterling will be in the hands of the banks presently. Further, it has to-be remembered that most of the • large banks of Australasia have recently increased their capital, and the Bank of New Zealand will do 'so presently. In addition'to this,-there is tho surplus arising from the high prices that are being received for produce. ■ • • ■ Though the change for the better is 'coming, the banks are-not likely to disturb the present conditions Until after the balance period on March 31. These institutions raised their rates for overdrafts some time ago, so as to impose a check on would-be borrowers, but now that the funds are in more than ample ' supply, the rates must come down. The banks, and the Bank of New Zea- ' land in particular, will not relish holding large sums, idle, and, by reducing the lending rate, will, no doubt, endeavour to attract . borrowers. ~; There will be no rush'tactics, but tho ..move-' went.-. will steadily grow, < and money will bo called for to finance investments of oho kind and another,- and in the creation-.of permanent assets. The lending Departments- of the State ■ will be-able"to finance loans already approved, and to deal with fresh tions;.: and local bodies will a'so have no ; troublelin-securin'g'tlle money• wh'-ch \inay require under the Loans : to Local-Bodies Act. •; ' '

It. may be three or four months before New Zealand feels the benefit' oi cheap money, but cheaper rates arc inevitable...... This influx of capital,, which will be available ,at lower rates -than are now current will have a stimulating effect, on trade and industries:. Betterment works will'be put in hand in most'districts, building operations are likely to be more pronounced, local industries ought to find reasons for increased activity, and retailers, wholesale merchants, importers, and.others ought to feel the full effects of the incoming tide of prosperity. ' At the time of the strjke of,the;\vatersiders,.and when the monetary position everywhere was dismal, it, was freely predicted that the pinch would be felt in; the winter months; but,.with the changed conditions, there should now be work for the ivholo population.' '': ' .'"