The Feilding Star. SATURDAY, FEB. 4, 1893. Cheap Money

Feilding Star, Volume XIV, Issue 97, 4 February 1893, Page 2

The Feilding Star. SATURDAY, FEB. 4, 1893. Cheap Money

We are informed by telegram from Dunedin that in a few days the banks doing business in this colony will reduce the rate they are now paying on fixed deposits by half per cent. This does not indicate per se that there is a very great surplusage of money in private hands seeking the safe investment afforded by the banks, but rather that the holders fear to invest in other more profitable, but perhaps more risky, securities. As commerce is generally dull in the winter months, now close at hand, the banks are wise in not accepting deposits at the high rates which have been current for some time past, because their means of profitably employing them will not then exist, while they would be departing from that policy of prudence which bitter experience has taught their to be tiie wisest, if they encouraged any business which had the slightest taint or suspicion of being of a speculative nature. Although it may not follow for some time, yet it is reasonable to expect that the banks will also reduce their own charges for discounts and other advances in proportion so as to bring them to the market level. Of course there always remains the doubt that money owners may prefer to accept the lower terms ottered by the banks, rather than select any other channel for its utilisation, and in that case the banks may be forced to create new markets for it, but the latter contingency is rather a remote one, and sooner than undertake it they would still further discourage the public from investing their money in fixed deposits. When monied people care only to invest their capital in this way it indicates that either the spirit of enterprise is dead, or they are afraid of spoliation by extra taxation. That they have some cause for this fear the political history of the colony during the past few years has given ample proof. On the other hand, the undoubted prosperity of the colony has done much to remove the bad impression created by the vagaries of the political party now in power, and confidence, amongst even the most timid will certainly be restored in a very short space of time. The congestion of the circulating medium in the coflers of the banks is at any time a calamity, and we notice with pleasure that the banks themselves have taken the surest means to avert it.