The Guardian (And Evening Star, with which is in corporated the West Coast Times.) THURSDAY, FEB. 14th, 1924. TILE BORROWING AGE.

Hokitika Guardian, 14 February 1924, Page 2

The Guardian (And Evening Star, with which is in corporated the West Coast Times.) THURSDAY, FEB. 14th, 1924. TILE BORROWING AGE.

The money market is always closely watched by countries eager to borrow to the best advantage. Tile Commonwealth and tho Dominion are ready always to do their slmrp k -Mr Massey "ho lias just returned has not secured any cheap money, but he announced a loan in embryo. Tho market was not 100 favorable at present, and there is a tightening tendency. Mr Massey, as reported in an interview, said that he had made application for a special loan of £ t,000,000 iii connection with the oiler made by the British Government, to the imperial Conference, of iinancial aid to the Dominions in respect of new developmental works, in advance of programme. This offer is, of course, subject to ratification by the Ramsay MacDonald Government, and appropriation by the New Zealand J’niliameiit. Tho latter "ill vote it quite readily, for there is an election pending in December lo2d, even if Parliament is not dissolved before that. This special loan is, of course, in addition to other authorisations, and Parliament- last year authorised a heavy loan for Public Works and other purposes. But money is becoming dearer for various reasons, the principal of which is the demand irom all quarters for loans. A Into table message stated that tho co-ope-rative borrowing scheme of the Commonwealth and the Stales was hound to have an adverse effect on interest rates in New Zealand, that the Victormi; Government was accepting money over the counter at G per cent., and that the Federal Treasurer, Dr. Earle age, was inviting applications for £19,-009-000 nt 6 per cent, at par. It is a fact that money in Australia is very tight—for the reason that the demand is so great. According to a financial authority tho large borrowings by the Commonwealth Government tend to restrict loans for commercial, industrial and agricultural purposes, and everything points to money getting tighter. In Australia during the last twelve months overdrafts went up by £23,000,000, and in the Dominion by £3,000.000. The banks have already lent more money on advances than they had on deposit. Xo doubt the large returns on the sale of wool will relieve the position to some extent, but as against that must be considered the question of whether the lambs will be fattened sufficiently on account of the dry season experienced in both islands. It will be a good tiling if borrowing is re stricted in Xew Zealand, ns loans by Government and local bodies have now touched a huge sum. and it is not in the interests of economical management to find so much money going out of the country year by rear for interest payments. It is a very serious drain on the resources of the country, and tends to keep up taxation unduly, without any compensating advantages. Borrowing tends to temporary inflation which is countered later by the fact that the money has to be repaid. With fluctuating markets for staple products it is not possible to meet the future buoyantly always, and that is the experience of Australia to-day, when it lias to finance the gratuity bonds for war service under heavy financial pressure. In these circumstances it need not lie a very disturbing circumstaju e

if Mr Massey finds money too dear to embark on further borrowing. A little fiugnl economy will he good for the country as a. whole, and the discipline will help the Dominion the? hotter through the financial problems ahead.