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Dominion, Volume 14, Issue 72, 18 December 1920, Page 10

MORE NOTES

«S' • • • FINANCING THE WOOL CLIP FEARS OF FURTIIEFi INFLATION The Order-in-Couucil, publishotl in this week's 'Gaaetifi) 'authorising tho banks to iituie additional notes to the ,-.mount' of tho advances they limy' mako oil wool held in the stores or by farmers itafl caused a good deal of surprise in .Wellington. The note? in circulation: in New Zealand linvo " increased' from .about in. 1914 to. over .£7,G00,000 ■at the present .time, and it has been stated bv liiaiiv authorities, including the .Minister of Finance, that inflation of the currency is.a very important• fa.ctor iti.increasing; the cost of living.' If n substantial part of this'season's-wool ; idip'requires to be held over; the - increase in the note issue under the Order-in-Council might assume very foniiidjible- proportions. ' .;. A Dominion reporter, making inquiries 011 the subject yesterday, gathered that the new Order is regarded- officially- mcrelv as a safeguaurd. The banks arc liot expected 'to require. to maku extended use of the authority that is bonis given to them. . Bank' credits are being reduced firmly at the present time, and this is a very ■important step towards deflation of the currency, which naturally would Ib'accompanied l>r" : reduction' the note iwrie. The extent of the advances thai, will bp-required on wool; cannot be'gauged yet,, but already- it is known thatmanyfarmei'sMvill hold their own wool without, socking assistance,'iind that others are 1 "disposed to sell and take, the chalices of the market. 'Hie advances made by the banks, on the average, wall be only a part nf the. nominal- value of the wool, as indicated by the auctions, and the total liability will not be «s large as might .be aiiticipa.cd at first glance. That, at any rate, is the ollicial view. . . . i