WELLINGTON NEWS

Hokitika Guardian, 28 November 1925, Page 1

WELLINGTON NEWS

dead., money. (Special to “GuardiWd \Y 10 BRING TON, Nov. 2-3. A London cable message states that investors now want a clear 5 per cent, yield, and they will not take less, and it is interesting to have this decision, f or 'it will affect the rates for money throughout the British Empire. The class of security in respect to which the British investor insists upon having a . clear 3 per cent, is gilt-edged, such for instance as New Zealand Government securities and the securities of the Australian States. If on such securities .3 per cent, is demanded what would they expect to obtain lor loans to workers for building purposes ? During the election campaign several Labour candidates, whose, knowledge of finance was evidently very limited, expressed ludicrous opinions in respect to State banking. One such suggested that because the Bank of England minimum discount rate for three months’ hills was -1 per cent, therefore the overdraft rate charge by the banks in New Zealand should be the same, 'flic aspirng Labour politician was unable to differentiate between the two classes of security involved. The dictum of the British investor that he must have a clear 3 per (out. on giltedged securities is very important, for it means a general advance in mone\ rates and consequently a relative lowering of money values, ft will also tend to check the persitent borrowing on the part of the Australian States, for if the British investor is to have his 3 per cent, then to provide him with that the cost to the borrowing State will be 5J per cent, or more and that will have a steadying influence. The New Zealand loan of £7,000.000 issued in the first week in May, carried 45 per cent, but- was issued at a discount, and the return to the investor was about. £-1 lis Od per cent. Tf tlie rule of the British investor holds until New Zealand goes on the market again —and it has already boon announced that New Zealand will want £.3.000,000 in May next—then the cost „f the loan to us is certain to he about 3', to oil per cent. However, it. is belter for the London money market to lend to the Dominions even if the rate demanded is high than to impose an embargo and restrict the development of the Dominions. The high rate of interest: will have the b'onelicial effect of checking the more “political” loans, floated for the purpose ot squandering in the electorates to maintain .a partv in power. Tn the Australian States the Labour Governments have borrowed and squandered money in a most remarkable, manner and Queensland is a striking example of this, rf the Bank of England discount rate is not advanced above the present- 1 per cent. Britain will lie able to get along comfortably, but it money becomes dearer in the l nitod States as the result of the Stock Exchange gambling then London will have to respond and that is the danger of the moment. MUTTON AND I.AMB. AVhen the freezing works opened last season the price for lamb was lOd per pound, and for mutton about 7.Vd per pound, and they did not stay there. The impression got about among some of the exporting companies Hint lamb would meet with an exceptional demand in tile lermiiial market, and the price of lamb rapidly ascended and as much as ]3d was paid. For a. time it seemed that the optimists were to be justified, but- linfortimtely the season’s results show that heavy losses were made all round. The price ot mutton also was exceptionally high and under that head also heavy losses were sustained. 1 p to the present it lias been difficult to discover what prices file exporters would olier for lamb and mutton this season. The works in the Wellington district are not yet aide to begin operations for the fat stock is not vet available, consequently there

is certain reticence Of sIIVIIOSK Oil tiio part ill’ ilio exporters. They nro not prepared In say what prices will lie offered. The freezing works in tTio Hawke's May district are about to begin operations, and their prices show that the test offers fur hindi amount to D<l per pound, and for mutton old per pound. This shows a marked decline on last season’s opening prices. On lamh there is a decline of 2d per cent, orpin! to 7s per head on a 281 b. carcase, and on mutton there is a decline of 2.1(1 per pound erpial to 12s (id. nil a GOlb. carcase. Sheep farmers will not appreciate the present outlook, for with mutton, lamh and wool considerably lower than lasi season there will he a substantial shrinkage in their incomes. However, the season of 192-1-25 was an exceptionally good one for them, and thev ought to he in a position to stand a set hack now. The British consumer is showing a. very strong disposition to revolt against high prices and it is just now a feature of the produce markets.