WELLINGTON NEWS

Hokitika Guardian, 8 May 1925, Page 4

WELLINGTON NEWS

GOLD AXI) LOANS. (Special to “Guardian”.) M'ELLI XCTOX. Miiv (i. ('nnsidernb!e interest is being manifested iis to the effect the reversion to tiie pi!ld standard will !i:ive on borrowing in |.oiulon by the Governnielit and the local bodies. The (lillieiillv of (lie exchange liettveen London and X./. in I DTI was under live millions sterling, and as onr foreign obligations for interest. irciglil and insurance in flie aggregate exceed that anionnt onr credit in London would have been exhausted hut for the fact that wo hold large balances, the result of borrowing in the London money market. These credits could not lie transferred to New Zealand except at a very heavy cost, because it was not possible to obtain gold in settlement. With the reversion to the gold .standard it is possible to withdraw gold from London, hut such withdrawal would he inimical to London, and I’ritisb hankers will doubtless do their utmost to avoid 'hipping gold to the overseas dominions. ’I hey will ell ret their purpose by restricting the loans to the Dominions, and this can be easily accomplished bv fixing a relatively high rate of interest or by insisting, that a large percentage of the loans floated shall he spent in Itritain. Hie New Zealand Governm. at is in need of loan money at the moment, and if the truth were known it is probable that negotiations for a loan are idivmiv in progress. Early in .May or late in April lasi year a loan of live million was raised in London. ami susequetitly a further million was obtained. and it was indicated by Mr Massey some time ago that New Zealand would seek to raise a loan earl\ ill the linaniia! year. The loans ol last year were on a I per cent, basis, and the loans were issued at £0(1 per cent. Can as good terms h • obtained this vear. and if they cannot what is likely to happen h There does not appear to lie much chance oi a 1 per cent, loan, bui •"> per cent would he probable, for that is now the hank rate, while a year ago the hank rate was iV; or even li per cent. I here would he loud complaints against any such advance. That the available funds for such loans is running low is proved by the fact that local bodies cannot icw obtain money from the Advances Department. for v.hat is available is being reserved for loans to settlers and workers and home builder-'. It is essential to New Zealand's welfare that there should he a free j| >w of Rl'ilish capital. There is danger of this (low being partially eliei i: si. and it mat happens a new situation will ari " which would be very unpleasant lor all, for if would involve many readjustments that would eau-e a great deal of distress. Where tie- local bodies and especially the smaller '’ties are going to obtain funds it is'hard I" say. Ii is not an easy matter to borrow locally, ami with tailing markets for produce investors arc likely to act with extreme caution. THE WOOL i'll A !)K CRISIS. Tim wool trade appears to have developed a panic for which there dues not appear to he any really soiid grounds. Wool has been on tre down grade ever since December, and the cons!:u.l recording of l"Wer values has got oil to (lie nerves oi' ail concerned ami confidence has vaui-hed. I'm a long lime maniifnelurci's have been complaining that they enuld not obtain for the finished articles prices < omineiisura i e with the raw material. Against this there has been a const mil

reiteration of supplies ", wool Icing ‘very nun li below time demand, end it was only the other day that So Arthur Goldfinch, who is regarded as an authority on woo! figures. Mated that half the world’s clip had disappeared. Tim wool lute passed from the producers to the users and led to the <ons'lac i .. who have c ui-i icut !y ivln.-ed lo pay the high prices demanded lor fabrics. I'iir: wool fabrics have h-e. u regarded as a luxury and artificial silk has entile in to case the burden ol tm* consumer. The statistics of wool product io el consumption must ncee- ; ari!v he iiieonildet so long as it is i-U----|s issi b!e to ascertain t!ie volume of [i: ; lshei! go. ds in the hands of retailer.-; mill wholesaler-. Hut after making all allowances for actual facts and influences. there is tm doubt that lac downward movement in pri< es has been carried far. At the mme lime .such a backward swing ol the ■ pendulum is necessary to at tract afj trillion. Everyone inleresied in '■ : -e trade is looking for some stability in prices, aml that may arise ..at of lie present- slump. Values appear to have .nine low enough to attract speculators. and it is U) he Imped ilmre will lie considerable .p. ett'arion. tor e\ei\01, p who Imps on a speculative basis immediately becomes inleresied in P,listing ihc market. The wool sperulelor has often been eondimilied. lull il I ■ would call' operato now be would ,j . |iriide a vast amount of good. A active buying now would steady the maria", and help to re-tore con-