WELLINGTON NOTES.

Hokitika Guardian, 6 February 1925, Page 1

WELLINGTON NOTES.

COMPETITION KOI? DEPOSITS. (Special to “Guardi-n”.) IV ELL INC TON, February 4. Sir Harold Beauchamp whenever lie presides at a meeting of shareholders generally has something interesting to say. When presiding tit the meeting of shareholders of the Equitable Building and Investment Society it was natural that he should refer to the demand for deposits. There is at all times a certain amount of loose capital that the owners wish to invest temporarily, and such funds are usually deposited either with the hanks, building soeieties or P.O. Savings Bank. The demand for money on mortgage iias been pretty insistent for a considerable time past, and owing to a variety of reasons, hut mainly the moratorium which has scared private investors In such securities the borrowers must .look to the lending companies and the lending departments of the State for the money they require. None of these concerns have unlimited funds, and therefore it is to their advantage to obtain deposits. In referring to this matter Sir Harold said, “ Owing to the demands of borrowers and the comparatively high rate ol interest offered, competition for deposits from the public set in. and the Public Trust Office, which as a trustee insti-

tution, is a law unto itself, and enjoys extraordinary privileges, invited such deposits at higher rates than the hanks wore offering and forced the building and mortgage companies to consider the question ol increasing their rates. This competition on the - part of the Public Trustee is much to , lie deplored for it is not in the interests of the community as a whole. , Tf such competition from the Public , Trustee continues, it obviously "ill , compel, in the near tuture, hanks, ] building companies and others to raise - their rates of interest on deposits in , order to protect their business. Sim. , ultaneously lending rates would have | to lie advanced to meet the additional | burden. If this were done to the ex- ( tent of say one half of one per cent, t it would mean that interest on bank | overdrafts, according to the last pub- i lished returns, would increase by over , C 200.000 per annum, which naturally . would he telt by all classes ol the , community.” The Public I rustee s , method of obtaining these deposits is | by inviting the public to invest in the j “Common” Fund, and advertisements t hearing on the subject, appear in most | papers. . 1

musr,i\ i i n r.rs -um' There is no dotibl that a fair amount of money is available for investment. Some of it arises I rum released mortgage moneys, the discharged mortgages being taken up by the Advances Department, and some ol it is due to the higher prices obtained for our produce. This money is being invested mainly in Stock Hxehange securities and very little in local bodies’ debenture-; or in mortgages. Hence there is considerable activity in the share mailed with certain favoured groups ol shares showing a strong upward tendency and this is particularly the ease with bank shares, brewery shares and timber shares, (lovernment slocks and bonds with the exception of the .V, per cents are selling at a discount especially the It per cent tax tree stocks and bonds. The latter movement is explained by the lad that the Clear .Meat Company distributed approximately C IoO. (KHI worth of these securities to its shareholders by way of bonus, and a great many of those who ree"""'* l those securities are con-

......... thorn into cash fit the host price obtainable, with the result that tbev lhtve fallen from CD" lbs to Cb(> 10s recently. The• debentures of local bodies which were readily taken up 1,1 1 ono lu . c apt difficult to place. Here again it is easy to give an explanation. Tin, local bodies cannot accept less ill a n par for their issues, nor can they offer more Ilian the rate of intoiest fixed for them by Order-iii-Couneil. This rate, except in a few isolated cases, does not exeeed bj per cent. This rate is not sufficiently aflraetive; fnrtberimire, onee the debentures aie taken up it is difficult to realise on them been use there is no market, and when pressed for sale a heavy discount is necessary. As Sir Harold itoauchainp remarked the other day. probably v a (i per rent, rate may attract the small investors, hut in that case there would lie a further withdrawal ol deposits front, the Post Office Savings llank. and a division ol the deposits that should legitimately flow Lo the lending institutions and the ba’nks. 'I he Post Office Savings Paul; is steadily losing deposits and for each of the past lour years Llio withdrawals have exceeded the dcjiosits, the excess last year .being over CPd.'l.tillO.

Till', PHEMIER’S PROPAGANDA. I'"rom 1 1 is sick mom the Prime Minister is managing to do a good deal ot political propaganda work, and probably low will take the trouble to cross swords with him over his political claims. llis latest hit of publicity is in reference to the operations of the Advances Department. In the course of 22 months to January 31. 1923, the Department advanced to IO.CGti l.iorrowers 210,063,908, or an average of nearly (j | ,0(10 each, which is no douht satisfactory, and Mr Massey adds, “ I think I am fully justified in saying that it is quite evident troin what has taken place that the Government 's leaving no stone unturned to assist * those who otherwise would hate ha i trouble with their linanee.” Tliis is no doubt true, but one may reasonably ask the cause of this financial trouble. The prices for our produce have been remarkably good ever since the "ui commenced, and in addition sorrowed money has .been pouring into tac country'and yet people are obliged 10 look to the State for relief. These are remarkable economic condition:.