FINANCE & TRADE

Dominion, Volume 7, Issue 2175, 13 June 1914, Page 6

FINANCE & TRADE

THE PAST & THE FUTURE

fluctuations OF MONEY MARKET

DISTURBING AGENCIES

REVIEW BY MR, HAROLD OEAOCHAMP. Ait interesting review of the money market of t-l» wo rid, and also of tbo trade and comraereo of the country was made by Mr. Harold Beiiuehump., elmifn::tu of directors, at tiio aii!ii:al meeting erf tlie propricMirs of' tliu .Bank of i\ew JSoaiami yesterday. "The London money market underwent a sudden tiaiicionuaticn oatiy lit tlie year,'.' lie said, '"file bestinfonnqd iinaneial writers i'n London tttd failed to predict tl»> iiiipenJiiiy ckafigo. In December last there was very little pfospoL't of iitiy case in the m<jney marSet, yet .bjr tiio lnilidJo of Jaaftary it bad btcomc clearly evident that money syas in jibiindant si;i)ply,- Tbo A'ew Sou'th Wales 4 pur cent, loan of £3,000,<X) 0, issued ditrfflg the week an January at the price m £'0!i, was a failure, as tbo uudcrwrfters were saddled witii 1)0 per cent: of it, that is to piy, tbo j;;ibifp snbscriptiffiis anioniited to ohlj 1.0 per cnit. A fortnight later, tiio Victorian loan of .Cl.jO - 'U),JJOO, alsit at_4 pel' cent., with, a miiffliiurti issue price of £97, was subscribed threefold, and-formed the first of a tftcccssiou of loar. issues Cincltxding 0110 of the Ke\v Zealand Ciov«riinie.nt) wiiich were JjT subscribed for hy invewors; : t'l?.o London 'Times,' tommcntiiig on tiio succi's.; of the Vir'onan loan, «-jiich was tbo- first celonial issue to bo fully suh■scribed: for niany fnonths, remarked: 'What- tiio i'eioo.very of. liupefia-l moans to our colonial. Iviiismen may lift gathered from the ehedting success of tiio Victorian loaii. It would Ei-:e.nr as if the long jK-nt-up .forces of investment nectlod tout a Ihile tnofe. enoouragOTßHt to break forth into a flood of bujin^,' '•Imperial Cenrfs, which dining 10:13 M dropped to £71, and wln'cii during tho lirsi week i.n .lamiary stood at £7'i, •155., a, fortoight later had risen to £7-1 —si! advance <s,f .£2 St. in two weeks, An immediate iniproveiiient in colonial Government stccks also took place, aud prices., on tho whole, have since been w;e!l m;ai-ritamed._ upward jjiotement ta'Consols cQß&in'uedi and an jfobraary i thfi Quotation was £77 12s, Sd,, tire highest recorded for a lottg time. This turn of affairs was very ecccptable, for Silt-ed;;ed Securities bad suffered very severely elurittg 1913, and the Jinprlish b.jnl<6 had to uso wer two iiiiiltor.s of tli.eir profits to. meet tho declension li'i ■values, jho Bank of Buyfla-nd dis:co.imtrafe, which liad stood at 5 per cent, sinco tiio ''beginning of October, was reduced <at January Sto % per ce-ivfi. pit Janiiajrj 2° it was _ again reduecd tf> 4 per cent,, and oil ,imiliary 2.8 1 to .3 per ceiit., at which it now stands.

Extonsivo Borrowing. "The i)ttoya,nc.y of tho tfKuttof. market induced many flo-veniffiews ta i.ssui:: loans in iAititlou. ]S ! ew Zealand, and. every State of this lliiv« been on the market, and iutve. placed, tkeir loans 'fire Xew Z.'a-. littd fibvermncni 4 per ccnt, loan of £.1,5un,009, ,isMied_ in .latuiary—£lr : 000,000 for redemption purposes, t)io baiattco fd'r public-. \y§rJss-'--w-as a. .greiit 6nccess. The minimum price of )s-sne was £Jooi, as coniparetl wit h iUSJ for tho last .preceding lean of £.3.._oiJi>.oot) issued ill Oct-bkcTj 19-18} clearly itulicattng the- ifflt>rovemo.nt that" had 4 takfeiv placo in the intsrim in the condition of fcho market. Upon flic opening of tlie lists, a strong demand was apparent, and within an hour and a half applications totalling £20,800,000 were receiv- j ed. Tho lists wero ihe-n closed, 'J'i'.o. scrip inniicdiatelY trent- to a prenrimn of ) par cent.' Tiio time for einissioti of the loan iva.3 well chosen, dlwi the re'' suits no'doubt exceeded all exp'-cintieji.

"In the couise of my reniarlcA at our last meeting, I pointed out thai the ifcw Zealand Govorirnien.t tel beci.i ablo to obtain for its October loan the nigh-eS-t price ol.the year for cohvilial Government loans. It lias maintriinod that position in its recent iasuo,. as w ill bo Seen by tho _ following particuinrs' of loans issued in 10Li:—

X awe of Amount Jiato Issue {Jovei'umcnt, of teati jp.ti. price. £ i !1 : Sw South Wales »,OOB,flD'o- 4 96 SasfcttchtWan ... 1,000,000 •! V&h Victoria 1 ,000,.000 4 07 West Australia i?,O0Q,0')0 4 ~f3SS Xp.t Zealand ... 4,.">00,000 4 100j South Australia 2.000,000 -i JO 1 .) Union ol S.A. 4,000,000 4 8?J . Domii. of Ca.ifa.Ci. 5,QU0,000 4 -99 Tasmania ...... 1,009,000 4 99 Quoeiislrtiid 2,QOO)QQO .1 .09 New South Wales 4 ' 99 C&od for Safo Stooks. "Some authorities hold the opinion that tho troubles that- hayts of lat<: fteen iSspcttenecd by the bowhholders of sflHto foreign States (.Mexico aaitl IBraZil), w,II operate in the direction - cf enhancing the popularity of; British and oversea Dominion securities, .as beiui:, though lofis roniunoratifc from the point of view of annual yield, decidedly more, depends !>io as regards securitv of both : principal and interest. The inference; Seems teaso'ijibfe, « : n.d vte> Aay pediajis bono to «-o Urn Stocks and bonds, not only of tho ])i>n;inion Governments, but also of the municipalities and other 10-; eai bodies of the. British Ponumous. presently increasing in public favour, City Loans, "Wo took prompt advantage of file opportunity, nfi'o-.dod h;y. tho favourable market early in tho year, to hunch soroo municipal loans which wo hud had in hand, for sonic time. . The folioiving wersi successfully placed:—Oit .Tan•na.iry 28—City of Auckland., ESS'i.fflO, i\ per cent, at par. Febnmry 11—City of wiristelHsreis., iloo,'ooo.i 4j f>i>r twik par. I'plii'iudfy 20—Cist;; o;C Dtttrediii, £'l.'(l.OOO, 4$ fxSr cent., at p.a-.n "Tiie Auckland loan, being first, i.u tho siarketj was «tyor i sub.£ori.bfcd, Those of Ohristtitijrch »ijwl BtiiVeetw., which wero offered later, after We. market had been'flooded with other issues, wfcre hot so fortunate;-, and their underwriters; wero loaded with allotments hi increasing ratio The present disposition o! !ho market- towards colnjiial loans of this character has been clearly showti ■to be- fiifeewafEti, Slid «o have ac.cprdingl.y desisted from attempts at further issues hi the. meantime. Other op-, portunities will no doubt arise in future. J and those, public bodies who ore oo.'ntnmplating an appeal to tho ho'tidon j motley market- wcuid do wall to perfect I nit the necessary antecedent formalities, j and iuu-o their arrangements in surli f fa.rwa.r-.) condition that issu.o of tho loan can be, made promptly wliea a favourable iv.nciure occurs. ''Awhile tho treatment accorded to loan? of this class is row much less, favourable than that -extended to them a. few years ago, we in New Zealand hare, I think, reason to cdiigra(ttjat.-e ourselves upon, tho terms tf<j- ate able to obtain. When . wo compare <m?; prices with those which others hare to nay, our belter position becomes a; cne.i; 'Ivifevt. K,aeS of ths throo loatns trijfcny mentioiirtl was, it will ho nteotyeit, issued at pai', hiit -an <?iwnUn jl-jon of tin terms, of other Issues niado dun'iii: the first few months nf fto year Ivy miniscipitlities in other purts of this British Bin pirn, a ml .e.kewhoro, sliffivß that several i.owits and cities, of tmportsnre have issued 4} per cent, and 5 per ccnt.

loans at prires below par-some as Inn a.« £91, It is therefore. clear that it municipality, which is able at the. preterit tiflto to issue its i| gw oeMt, bauds Jit a .minimum -o.f par, has good reason to -bo veiy well Kai.rsJied with ilio adiicVenient, British Flnano|ers Cautious, ''Although loans, colonial and foreigii.,. havto been issued hi London with coiisi&rilWo suectss during tlws .past itvo <ri' sis ii.iid tjio value of iiJoil#y there is at present low,, tlifi terms nit widish flotations cswi bo .nifjiilgta remain i tjiiiparaiively high,, and political distiirtyivnccs may n-t any time «oiui theni ■still higher. C';> iit»i«:i is no doubt hei)tg- osor<-.ised by British .fmaijdcl's, and iliiit tisejco is lined for it is evidenced liv the unsatisfactory s:tai<s of affairs in Sfaitfo, and'tli» finqfie©;] troulrks _ in l-'ra:iw, CiJnii., and Brazil. Adeorctinq, to telegraphic itjess.iices to tho Press, FrWvcß is under tho .Necessity of taisiug some,.. i'iiJlUO.dO.O almost iimitediaielv if fell© is to bo ill a position to m<;ot bsr obligations, China and Brazil art s:ifie.rine from financial stringency, white ■ Mexico, aft-or a period , of exhaustion , fi'Oi'n int«;iial anarchy, is now at war with the Pnitcd Staies. Sonio w.op'un ago '.he financial conditions to. Mexico Were extremely bad, and exchar.go bad reached Mio worst point known 10? ma.uy years British investors lava : very extensive interests in Mcxioo, and tiio 'clean up* will involve many millions starling. The. Un.it.-jd States o<»r- -. orinnont aione talks of providing wai funds to tkes extent of £30,000,003 s'tov- }«!«,.

"There are. other contingencies also thai may jeopardise tho money market, or at least cause a disturbance.. In past years Great Britain has lent vast sums to fipaiicc t.licr trade and .i.iidilstvie.s of ike world, and Hie disbi-rs^ments under this head are worth recording. They o re. a.s follow :— ,19«. ' 19".:. 1913, £ £ £ ■trttf. Kinptfom 26.K5 900 <5,536,500 3E.551.E00 British possesHohd 64,554;®® 72,6J2.<M 76.137.&0 J'oreij?ii couiiti ica iGC,Mfi,7OO 552,672,300 8-1,4<8.K0 191,759,400 KO,6M;CCO 19(-.M7,CC0 Demand Insatiable. "Canada 'was., as Usual, the biggest Iso'rrowcr las; year, her total lieing £4t,1?!),iJ00, as against for tire I'nii.e.d Kinguom, £18,() - 23,!)00 i'or Australasia, .(jlf/yliJO-ijOO foi' the United States, £ 15,C00,6f)() for Brazil, aiid :L'I2,.'!O(),UOU fer Argeiitiiio, As olio auttertly olisfei-vp,?, 'tlie fliiiiicdlat'e ixiur.se of inarkot.s must 1)0 determined niaicly by the muuro o.f tho bofrowinj;. Consolidiitio'i. of .float i;nn loans is comparativeiv unimportaiit;. fresh bos rowtor fal' Hew e|i.io;rp.rjs<?,s is -of t-l)6 greatest importance, (.'apital taken off tlw market for tiif; first time in loans, and put iiito reproductive trado or mi productive armaments, must diminish tho supplies of lftoiwy- and tend to taiso discoiiiit rat'.>s and lower the prices of securities.' "Tl;e domatid for capital supplies is ptniriiig in from all quarters of :!;(>. vt-orH, and appears to be quito^insatiable. Vou will apprecift'te tho immensity of tl;o 'rush' wjicn I tell you that, tho applications dealt with in the Lr>nSm i-narkat. dtlri% tlie "first two iiicjiitifs of U;o current- year .amounted 'to. neariy 75?} millions, being nearly double the. amount dealt with daring the corresponding periods of e.aoh' fif ikfc tlircd. ]i!eceding years. .. Such an enormov.s ffirnovi i' niusij if cantitmeil, so'opev o: later exliausi tho supplies and lead t' :!n enhancinnent of money values.

But Supplies May Run Short, ; "Wfiti.iv;; recently 'on the subject of . LiMwloh capital applications. a financial muhority remarked; ; " \-Ufhoit»h conditions have ;<?neouracofl an abnormal output of p'r.ospcctusos, toiderivjJffflps have net, been altofiethiM- retelling in easily-earned eom- . mission!-, far in many cases ilicy liar© 1.r.0n left ivi-tli la f.p> amount s of stack. Still, tho ri.iirkr-t iras shown a woiidet{■iil nlworbi-ug capacity, and new issue •quotations at the present, time, «1thounh in realty eases favouring tlw public to a sinstl extents have not prevented undenyn-ters from disposing <Sf their obligations on remunerative terms. , . While new issues ewiMmvo to bo absorbed by tho public . . underwriters cii;ii reap profits tbo quickness of i'hiclt compensates far tiro loss : of a portion of their commission, .'uul enables thfcm at the same time, to keep : ppoh for ncr securities, jJui tiio public's absorbing power is not. iinli.mif-oii., and now apjiljoaitipiis st the rote ;of 100 millions a 'i'lartfr cannot emittnuo for lout; without a-ffectms: alike the markets for both new and esist-iiig Sccnri.t iei."?..'* Condition of Trade. "The condition of trad* is. of coiirs", ■a.ti iwporta.nb ekmiont in .forecasting the future -.of the mosev iiiarket-. 'tVr Hie. past four yoifrs, tiwio .has fee'oft ac.iivo and mon?\Y has been dear, J»i> tho Iwwm iii i ratio .seems to ha vo <>n.dqdL and' slackness may,, now prevail for Soitio time. Sanies of the relief of thy monetary tension tvhicli lis® been e.x-per-ionced has beten. a coiisotjuenco of this, The British Chancellor, however, ■Stated a few v,ceks ago that ho tlid not ant-topate any serious set-back in trade, aiid. while ike phenomenal activity <jf 1,311) was not likely to be repeated, he ■osjwotod the trade of T91 ; l. t-is bo up to the average., h will not be safe, therefore, nt present, to count upon a. prohinpe.l period of tTie.ap money. I<o.oally, 'flicre is a tontlency towards ease, Vat: it Is not a't pr««'nt pronounced. and iio redaction of the ntling raffs for ac- ■ commodniion is, in the meantime. likely. Shortagfl ot Cold. "We have also to bear in mind that '■ the gold production, of the work! exliShits it shrinkiui' tei'.ileiiov. The labour troubles in the. Transvaal, and tbo war lit 'Will lead fci .a restricted. Optm;<. in those countries. I"m> : foll,oW\ii>,£ is a summary of thw nrodnofion for tho ■fiast sevpii v<yi-rs'i—-tfiMvj £&2<2;)8.502-: IpOQ' £>R.G?(inn!>: ] D 99, ,c;>l ; ilpm .coast?,";'. 1 ); 101', •£!'»].S'S.-tt)! •; T!M2. .ClU.SO'i.G'iS: IJH#> X!,r. '-oia! produrt'.Mi for si'.ows a d'e.#TO of or L'.S per cent. Tlie Transvaal, which rpn'irib.uie.';.r,;etn tlv.ft.ii. .we-third of the whole -.vorld's snppjv, appears to its maxintuin esiiwoilv as ro'<mvniit, and M»ti> is no viiiier known fi"'! ! '<!. the nreseMt time offeriiic urosivets of substantially ;n;proved yields. If tlie priiijndaem of the meft.il eoh.tiintes i^de.cv.e.ase, ft must nttinrntely have ait hfiwi'S'C of- ; feet on f:io. prices of ronuno.dikios. Not an Unmlxcrf Evil, "Seme autho" : tio.s hold, tkai.a. reduction in ilto r.o.id out r-'it of the vou'd net he. an aito.WHi.ft'r uuniixe.] ovi!. They <Joiisj«ter th:vl l.!:e viso in ■. -jjrifo 'of ■ttoi3itiWdjtjt*a th;:.;.- '.as taken I nfaee ihp b-t &>ciisip has bswfl i broiud - .! about by tlio <'<ine-,irro.;ii lar,ES j <:rowt'h m the world's ifioM prorltio' <'i v . I I cauTiOt, kov-'oviv. r.iysrlf s"i- tliiii 'h* ' vlnfM' T'espoh'sftilHT for Itavdeited m'i'eKs j e(i.n bo liiil nt. the door of gold prediction. It probr.b'v )ms had >on">_ en,cc in the pta.ltcr,, liot tire' tj'rjiyrfiy'»l tea.Sotis foe sver'C-fMg. for in 'Atlier Tlt.-o iniijilt factor. U seflii'vs to sir., ba< l-eeu that of supplv aivcl tfeiivand fcilo'-v'- ; .nc upon tire stswrtttij uf living that has rrad.nn.liy eetro jiito Vflpno (luring the last tiyen; r veors ■ —the period tliWiseliOivt wiiien t : ha -'nfr [ireciafiou of values h'ts. beeit most n>arked. ■ Popnl'ition is •ire'roasin-;, anil (lie prodtteitii.; section of tlie comii.iinity is Mtwasinn oot!v::<i>ondin-.'.lv, eitl/cr in Vimnbers, or in volunin <i'f output. I'te prod.ieers are claiuov.Hn>; for and f.l)laii>:iio. I'S.teijer pav and shertev hours of InlKAiir. wliioh riioftiis that. the. ,prndvi.efi of ill"!' - lev! fla.ti ho sol.) jii i'tiVS : v.'f>rVVs r.iarkets only irt, ,n nric.e pr.ntior■ttongMs iti adv.ir.cf; of that .kit which

it could bo sold when, the cost of production was less. Thus, every advantage that labour sccures in its struggle for improvement of its conditions is won at tho expense of tho community as a whole. 'fho consumer must, in the end, pay for tho cost of producing tho articles consumed, mid nonce, In. jargo measure, tho increased cost of living, of which in these days wo hear so much. Is the Boom Over? "As I have already remarked, the boom in trado seems to have ended. Thero is evideuco furnished by nearly every commercial ceil tro in tjie world that trado is less active than it was. EJomo inclino to tho view that a period of depression is sotting iu. Last year lvas a rccord year for british trade, the combined imports and exports amounting to the colossal sum of £1,401,151,000. .Eight years ago, viz., in 1906, tho aggregate was only £1,0G8,065,000. The increase to last year's figures represents a growth of 31.40 per cent, during tho period. Most, if not all, of the leading countries in tho world enjoyed oxtromo prosperity throughout 15)13. Tba,fc conclitior., however, appears to ex- . ist no longer. There are, moreover, at tho moment quito a number of "lame ducks." Tho Balkan States and Turkey aro suffering from' the effects of tlio recent war; Mexico is, as 1 havo already observed, tho victim of anarchy; and China has been ill linancial straits for some considerable time. Urazil is also iu a bad way, owing mainly to tho collapse of tho rubber market. ■ The purchasing powers of tho peoples in .these countries are, as a result, very, much restricted, and trado suifers in oonscquciice. Nsw Zealand Trado. So far as this Dominion is concerned, trade is satisfactory. Our exports for the year ended March 31 last attained a record level. A comparison of the value of tho principal products exported during tlio past two" years shows us under:— 1913-1914. 1912-1913. £ £ Butter 2,140,019 2,056,615 Cheese 2,195,273 1,859,179 Beef 446,816 324,578 Mutton (carca's) 1,872,654 1,500.728 Mutton (legs and pieces) 32,848 43,522 Lamb 2,548,914 1,825,342 Wheat 11,806 95,414 Oats 18,858 468,880 Potatoes 1 7,016 150,601 Hemp 673,835 , 483,353 Poultry, Babbits, etc 77,967 50,851 Tow 60,828 41,005 Kauri Gum 574,285 4 30,200 Grain and Pulso 80,737 162*872 . Hops 26,430 20,693 Hides ....; '288,631 234,735 ' Skins 925,565 860,782 ' Tallow 701,085 672,839 Timber 319,652 475,320 Wool 7,584,063 8,065,918 Gold :. 1,462,338 1,305/217 £22,049,650 £21,128,686 The past year shows an increase of , £920,964, or 4.3 ,por cent, as compared with 1912-13, which year exhibited an increase of over £3,500,000 as compared with 1911-12. . Tho increases for the past year are derived mainly from dairy pi'dduco and 'frozen moat.

Wool. For tho year thero is a shrinkage in tho value of the wool exported amounting to £431,882, and the quantity is also less, the total being 182,854,0961b. against 195,782,5431b. Hero again it is well to bear in mind that tho recent . strike dislocated, trado,'and, furthermore, wet weather delayed shearing. On tho larger number of sheep in the Do- • minion last year, t as compared.,with the previous, year, it is reasonable to expect a bigger clip, and when the produce year closes this deficiency will have been inoi'o than recoverod.' Tho wool market is,.ill. a', very healthy condition,. prices aro. high, and the demand ' is active.' Australasia has not as yet felt much benefit from tho free admission of raw ■wool into tho United Stiitcs, because the American manufacturers havo been obliged to adjust their affairs to suit the changed conditions. No doubt American competition will presently make itself felt in this market. Frozen Meat. \ For the year ended March 31 last thero was a very substantial expansion in the exports of frozen meat, especially in mutton and lamb.Compared with tho previous, year, the increases wero as follow: — Lamb £723,602 Mutton ... 371,926 Beef 122,233 £1,217,766 I am inclined to think that the increase ,in mutton and lamb is oxcep- ■ tional, and that next year will show a fall. Statistics seem to support this expectation, as a consideration of the figures of the past few years will show. Thus.— Year i Total ended Exported number March 31. Carcasses. ofsheOp. 1909 — 23,480,707 1910 5,044,171 24,269,620 1911 5,947,704 23,996,126 1912 ...... 4,897,398 23,750,153 1913 5,106,199 24,191,810 1914 6,376,615 — Thus for 1911 tllo exports totalled 5,947,704 carcasses, while the sheep returns for 1910 showed that our flocks numbered 24,269,620. Thero was a shrinkage in the exports in the following , year, for tho sheep returns wero smaller. In 1913 and 1914 there are increases in exports; and for tlio past year tho total is large, while tho. uumber of. sheep last year, though larger than in 1912, is less than the figures for 1910. It appears, therefore, that thero has been this year an excessive export of mutton and lamb. Accordingly, it is probablo that the sheep returns will (Unclose a shrinkage in tho flocks. If this be correct, n. drop may bo expected in the volumo of next years' exports. Tho flocks of the Dominion arc practically stationary. Any increase is quickly >jon't to the freezer. ...

Dairy Prottoca. Tho exports of butter and cheese, • the latter particularly, shoiv a very gratifying expansion. The quantities exported during cacli of the pas'; seven years compare ns undor:— Year ended Butter. Cheese. March 31. cwi.- . cwt. 1508 271,323 2,<52.673 1000 275,956 310,085 J9lO 321,P75 ' 441,884 1011 367,849 450 371 1012 327,282 463,610 1913 369,133 634 173 1014 395,169 742,371 The exports of cheese have moro than doubled in five years, and there is a satisfactory increase in butter. Tho production of clieeso has been stimulated by the excellent prices ruling. Tho defect of last season's shipments is said to havo been that too much moisture had been left in it. This is a blemish which manufacturers can easily remove. Tho limit of expansion in the dairy industry is not in sight, and while prices remain good, growth will bo certain. Hie opening of tho Panama Canal, the reduction in tho American tariff, and tho revision of tho American currency laws, -will combine to cncourago trad'o between Australasia and the United States. There will bo many difficulties to be faced in pioneering tho exports of New Zealand buttor, cheese, and frozen meat to America, but theso will disappear as our products become better lcnown. Growtli in the trade is obviously anticipated, as larger and swifter vessels arc to bo placed shortly on both tTin Vancouver and San Francisco routes. A direct service has also been established between Australasia ami New York, via Capo Horn. , "Apropos of our extending markets, I would say that it is to bo hoped that shippers will bo punctilious as regards

the character of the produce sent forward, and that the Government inspectors and graders will bo rigorous in their requirements, ■so that the New Zealand output may bo maintained at a liigh standard, thus earning a popularity that may be well deserved, and securing a consequent command of a ready and remunerative market. It is in this way alone that a satisfactory and permanent trade can bo developed. Tho importance of this question, from the standpoint of tho producer, is very forcibly borno in upon us when we review tho values to which the pastoral and arable lands of tho Dominion have now attained.

Rise In Land. "I have been engaged in an endeavour to arrive at the extent of tlio appreciation which has taken placo in values during tho last twenty years, and havo been generously assisted in my effort by trustworthy authorities in different parts of the Dominion, for whoso aid 1 havo to acknowledge my indebtedness. The subject is one into which so many considerations enter that it is impracticablc to arrive at a uniform generalisation: but the figures that havo been furnished to me indicate that, as a rule, afler allowing for variations necessarily incidental to local conditions, tho increment in land values during the last twenty years has been generally greater than has been justified by tho higher returns obtained in later years as tho result of improved markets, better methods of working, etc., etc. For example: Taking tlio dairying industry, which was in its infancy in 1594, we find that land in favoured districts, which in ISD4 could have been bought at from £5 to £15 per acre, is now selling at from £20 to £75 per acre, an increase of say 400 per cent. Tlio gross yield per acre has, however, not increased in a corresponding ratio, being only about 130 per cent, more to-day than it was then. "Land hunger and competition are forcing values up to a point which loaves no margin for any material inI creaso in cost of production or decrease in sale prico of the product, and as tho cost of production does not seem likely to diminish, but rather to increase, no effort should be spared to maintain tho excellence of the product, so that a drop in prices may not occur as a result of deterioration in quality. Tho increment in the value of sheep lands has, generally speaking, not been so heavy proportionately as 'that of dairy land. Roughly, the value of such land has about doubled during tho twenty years, but tho better average prices ruling

now, and the improved nrosnccts of the wool industry, quite justify the increase: and sheepfarmers, working under normal conditions, have earned in recent years a better return on their invested capital than they were obtaining a decade or more ago. "With a view to arriving at an approximate idea of the extent of the aggregate appreciation in valuo that has taken place in the country lands of the ..pominion, I have taken out the canital valuations of county lands at 1891, 1901. and 1913. They show tho following comparisons:— 1891— £ £ North leland ... 39,256.818 South Island ... 46,561,349 85,618,167 1904— ' Inc. North Island ... 66,968,046 p.c. South Island ... 54,998,106 121,966,152 1913- Ino. North. Island ... 131,042,439 p.c. South Island ... 67,239,599 218,282,038 78.96 "The greater part of the growth has, it will be observed, taken place in the. North Island. The appreciation there between 1891 and 1901 was equal to 70.48, per cent., and between 1904 and 1913, to 95;67"per,cent,;>,:ilft tho South • Island, the increase' at the" two periods' was 18.11 per cent, and 58.02 per cent, respectively.. The percentage of increase for both Islands combined is, as mentioned, 42.12 between IS9I and 1904, and 78.96 between 1904 and 1913. The. actual values of the comity lands in the North and South Islands combined are, as I have quoted :— £ ' In 1891 85,818,167 1904 121,960,152 ' 1913 218,282,038 ' "Including boroughs and tgwn districts, the totals are: — £ In 1891 ...' 122,225,029 1904 182,796,241 1913 340,559,728 ' Much of tho increase is due to actual outlay on improvements—clearing, sowing, fencing, building, etc.—but the major portion is increase brought about by settlement, and the higher yield resulting from improved methods of working and better prices. Clearly the values of land—dairying land especially —aro adjusting themselves at such a level as leaves no room for tho 'slipshod' farmer. If the industry is to continue payable, with land at such high values, scientific principles must be followed, and the most approved methods adopted, in order that the very best returns on the labour and capital employed may ho realised."