WELLINGTON NEWS

Hokitika Guardian, 16 January 1926, Page 3

WELLINGTON NEWS

-MONEY IN 1926. (Commercial Correspondent.) WELLINGTON, January 13. Those in touch with finance and banking have no hesitation in declaring that money rates are finely to be high. One authority expresses the opinion that money would he scarce and dear in New Zealand. The position in this country is governed by world conditions. The new year is scarcely a fortnight old and we find the money market disturbed. In the United States the rediscount rate of the Federal Bank of New York has been raised from 3] ]>er cent to 4} per cent. One would have imagined that if money was to he cheap anywhere it would have been in the United States where there is unquestionably an abundance of capital. There lias been, however, so much gambling on the stock exchanges of America, with every possibility of nil unhealthy boom that the bank authorities have determined upon applying the brake. Whatever the reason for the rise in the rate the lact remains that money is dearer in New York, and this must react on London. Usually the Rank of England rate is reduced in January, hut there is little hope of any reduction just now; on fho contrary there are fears that the hank rates may ho raised if there is a disposition on the part of foreign countries and the dominions to borrow heavily in London. While money is dear in London with a tendency to become dearer, there is very little hope of money being easier in New Zealand. Furthermore, owing to the decline in the prices of our products the country will have very little funds for replacing worn out capital and certainly very little for new enterprises. What seems likely to he the position in 1926 is that New Zealand will for the first lime begin iq feel the aftermath of the war. That i« to say a start will be made to squeeze out inflation, and that will he a distressing matter. The conditions are likely to he troublesome this year because .the country’s exports will return front ton to twelve millions loss than lasj year. There is no necessity for pessimism, hilt (here is need for caution, for courage and for determination to make the best of the circumstances. Tt is probable that everyone will have to work a little harder and spend a little less, hut Hint will do

none of us any harm. BANKING FIGURES. The hanking averages for the December quarter just published tend to emphasise the fact that money will be in strong demand. In a good season with prices ruling high as was the case in the closing quarter oT 1921. (here is praeticallv very little demand for bank accommodation. As a matter of fact in 1924 Hie advances decreased as compared with the corresponding quarter for 1923. but last quarter Hie advances showed a substantial increase ol £2.399.513 as compared with 1921. This rleailv proves that there is a decrease in the income of llie producers and traders have found their turnover to be smaller. Whatever may be the explanation the fact remains that llie people arc leaning more heavily on Hie banks Ilian was li-e case a year ago. The discounts also prove Ibis for (be figurc-s tinder Unit head have increased bv £218,460. The advances and discounts combined which represent the borrowings from ib<- banks, in tlu- past quarter amounted to C4b.bb1.127. its compared with £45,936.451 in the eorresnonding quarter of 1921. and £46.229.394 in 1923. The oilier important figures in the banking returns arc the deposits. The free deposits or current ip-count balances for the last quarter totalled £25.189.553 as compared with £21,776,888 in the December quarter of 1921. then- being thus an increase of £112.665. The increase shown in 1921 was £515.846. The fixed deposits totalled £20,810.809 against £19.899.611. an increase ol £911,1118. while last year the increase was Cl .330.->76. Now it is a well known fact, that hunk advances make bank deposits and as the advances and discounts show an increase of £2.617.973. llie deposits should have shown a corresponding, or an approximate increase, but the free and fixed deposits show an increase of only C 1.353,863. or just about half the increase shown by tbo advances. Tt is difficult to know wliat has become of the hnlnnte. Tt is proha bio. however. that tlu- amount has been transferred beyond the Dominion to pay for merchandise and securities. The banking returns for the last quarter are not satisfactory when compared with the returns of a year ago. and for that, reason caution is enjoined.