The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, OCT. 23rd 1921. FUNDS FOR FINANCE.

Hokitika Guardian, 23 October 1924, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, OCT. 23rd 1921. FUNDS FOR FINANCE.

Tjie money question, in nil its aspects is a very disturbing problem. The generic cause is attributed to the exchange rate. But in any case there is keen competition for available money, and rates are advancing in keep-

ing with this demand. An exchange points out that the Government is offering stock ami debentures for safo over flic counter, the interest rate being s', per cent. The Wellington City Council and the Wellington Hospital Hoard are offering 55 per cent, debentures for sale at par. The I’u'hlic 'trustee is offering 5 per cent, for deposits for live years, and the Building Societies are accepting deposits for 12 months at 5 per cent., and .»J per cent, for 21 months. This competition may force the Dost Office Savings Bank to raise the deposit rates, and if the banks are likely to lose deposits through this competition, they too, may find it 110cessarv to offer better terms tor deposits. in which event the overdraft rates must go up. The bankers have been busy for some time elucidating the tinniicinl position for the benefit of all concerned. But according to a press telegram of last week doubts having been east on the statement made by tho banks that they are holding 1111 excessive accumulation of funds in London. Mr William Watson, acting-chairman of Lho Bank of New Zealand, made tho following announcement regarding that feature of the exchange position so fains the Bank of New Zealand is concerned: At present the resources of the hank in London amount to nine and a half millions. This is at least five millions more than is required for the conduct of the bank’s business, mid at times during the present year the surplus lias been some millions in excess of the present figures. On this large amount of money there is earned only one-half the interest which could be obtained if the lands could be transferred to the Dominion, ft should, therefore, be obvious it "<>"!d be in tlie interests of the bank to have the excess of ils resources in London madeavailable- for business in New Zealand. As il ts. the inability ter transfer these surplus funds to New Zealand obliged the bank to restrict advances in fbo Dominion. If the bank should consider only its own interests, it would not purchase any bills on London until tiv sales of exchange, its funds bad been reduced to satisfactory figures. Such a drastic measure would, however, lie disastrous to exporters and producers; therefore it is better for tho welfare of the Dominion as a whole that all the bills offering-should be purchased, the bank charging the exchange rate to enable it to meet the- exceptional position now existing. This statement brings up the inevitable subject of exchange. The authorities have been probing for a remedy in various directions, but so far there is 110 solution. Now comes a rather simple proposal by one who writes anonymously to tile press as follows:—The present position regarding exchange between London and New- Zealand is very unsatisfactory, and reference has been made to the matter in Parliament. The exports from New Zealand exceed the imports by a considerable sum. and this means that not only the banks, but many exporting companies have large credit balances in London, which money is badly wanted for trade in New Zealand. Formerly trade balances were adjusted by shipments of gold, but as this is now impossible, the position is a difficult one. A suggestion which lias considerable merit in it. is that the best way to overcome the difficulty in the meantime would be for Parliament to pass an Act and make Bank of England notes legal tender in New Zealand. Exchange balances could then be adjusted in Bank of England notes, and this would overcome the present difficulty. It would allow huge quantities of money now lying in London to bo sent out here and used in development of tho country—and in trade generally.” This idea is for the authorities to consider carefully.