The Hokitika Guardian WEDNESDAY, MARCH 1st, 1922. THE MONEY MARKET.

Hokitika Guardian, 1 March 1922, Page 2

The Hokitika Guardian WEDNESDAY, MARCH Ist, 1922. THE MONEY MARKET.

Mn Hauoi.d Beauchamp (chairman of the Bank of New Zealand) recently g»ve his views to a “New Zealand Times” representative on the present financial position here and at Home. Tlie great boom in all gilt-edged securities in the Old Country,” said Mr Beauchamp, “is unquestionably due to the plethora, of money in London at the moment, which is occasioned by industiial inactivity and the great fallingoil' in trade duiTng the past year or so. Money which otherwise would have been employed in industrial enterprises, is. no doubt through lack of confidence, being invested in first-class bonds and securities. The bank rate, as will be noticed ,has recently been reduced to 4.f per cent, and from day to | dtfy loans are now made at round about 2.J per cent, per annum. This is a substantial drop as compared with the rates ruling twelve months ago. Undoubtedly,” added Mr Beauchamp, “this is a most excellent time for over-

sea Dominions and others who require to raise loans to place them on the London market, as, if there be any return to confidence in respect to industrial enterprises, money, in my opinion will rapidly harden in value. It is fortunate for the Corporation of Wellington that through having met with a aerie* of difficulties, it was unable to go on the London market, as it wished to some months ago. Its failure to do so

has no doubt been a blessing in disguise; and if to-day Wellington is in a position to place the loan on the market it ought to be able to do so lat roughly, 1 per cent, lower than it would have had to pay had it been borrowing, say. three or six months ago. That means a very substantial saving when we understand that the loan is in the vicinity of a million. It will mean saving '£7/500 a year. It will be remembered that within the last week or two the city of Sydney placed a 6 per cent, loan on the London market at £O(S, and this was subscribed sevenfold. The rate is ( in marked contrast with the one now paid by the State of Victoria.” Tn reply to a question as to the position of the money market in New' Zealand, Mr Bfmuclmmp anidi— ,f T think that lenders in this country are employing Pifwfc their funds in Inking up 4$ per

■ <ent. Government bonds free of income tax. Exactly the salUe position prevails in the United States of America. I recently read an able • article, entitled ‘Capital on Strike,’ : which showed that, through the excessive taxation now imposed in that t-oiili-tiy. lenders are doing precisely as they are doing here— namely, investing ill what they call “exempts.’ that is, bonds or dob ntures free of income tax. The reason for this is quite obvious and whilst there are many people here eitger to Iniv these bonds at the present rate, it is utllikelv that they would he prepared to lend on mortgage for a term of years at a percentage lower tiiati the rate now ruling, 7 per cent, per aunuln, aiid

not inulli money is available for mortgages even at that high figure.'