WELLINGTON NEWS

Hokitika Guardian, 5 April 1927, Page 4

WELLINGTON NEWS

MONEY AND LOANS. (Special to “ Guardian.”)

WELLINGTON", April 1. With tin' closing of the first quarter of the year the time for stock-taking wifi have arrived. Several hanks, indialing the Hank ol New /ealand. will ko busy preparing their balance sheets, the national accounts, too, will lie receivin'; attention and shortly we may expect to have the quarterly banking averages, the trade returns, the 1 ost Office Savings Hank returns and other seasonal statistics. Main interest will centre round the hanking returns, which should he available in the course of another week. It is pretty certain that the deposits will show a eontrirtion as compared with a year ago. air.l the advances an increase. If Hus surmise proves corns t the inference will he that the savings of the people have decreased and spending power has shrunk. The increase in advances will indicate that imports are still in excess of requirements, and ol course there are other minor causes. 'I he drop in value's of our pnmary products accentuated hy the recent fall in hotter and cheese will account for the contraction in the deposits to a certain extent, hut against this is the laet that the wool clip as a whole has been practically sold and the proceeds distributed among the growers. I nilonbt edlv there is n <£ot><! (loniiuid for iiiono\ on the part of farmers, traders am j others and the demand for credit exceeds the supply ol credit. I here if thus a tendency lor money rates tc harden, allhough there is no actual' ad vance in rates. The hanks will en deavour to put off as long as possibh any attempt to advance the overdraf rates, and they may he forced to it j they cannot attract deposits. IT de posits are to he obtained banks inns offer attractive rates, and an advanc in deposit rates will necessarily meai an increase ol the overdralt rates The hanks may prefer to ration tliei customers, and this may perhaps b the best course to pursue. It is possible that the public accounts will shot a surplus hut it cannot, he very large for the customs revenue owing to tli contraction in the imports, especial! during the past three or lour month.' must affect the situation. The Got eminent must presently go on the Lot don market for a loan. Ihe New Zei land Government usually borrows i May. It did so last year and in 102.' and therefore in less than six woolwe should know the intentions of tl Government in respect to this matte The loan (lonted last year was a huf. success hut it does not necessarily fo low we shall have a similar experieni this year. New Zealand's credit ui douhtedly stands very high in tl London market, lmt London is not i< flush of funds. The balance ol trad even taking invisible imports and e ports into consideration, was udvor to Britain, and there is very little t< investment. Of course New Zealai entil'd borrow in New 'i ork hut it is he hoped that the Government will m go to the American market. It won he better to stick to London even we have to oiler better terms thr usual. Australia is in need of a great de of money this mar. The ('<>mmo wealth Government lias a loan 112,750.000, falling due ill London ( dime Ist. and New South Wales li: C 11.000.000 maturing a month late and conversion loans must he issued cover these. In addition New Son Walls '

(:■■>, no:i,<!(>u. Kyduey wants W.0d0.000. the .Melbourne! and M."l ropolitan lionrd of Works and the .Melbourne Ti'iumvays Hoard also require fresh loan fluids, and it is doubtfid whether a.’i Ibis can bo raised in London, indeed, it is stated that London is not a competitor lor Australian I inns. Sydney is til present restricted by I

shuion to iissuiiifi sterling loans. ; mil it i' a signiik'aiit I’m-t that efforts

mv hcina; made to hare the net nmemloi.l -•) that dollar loans may ho issued. It is pretiy certain that the creator portion of the loan reciuiroments ot Australia will he secured in Now York. hUiatively higher rates are payable in Xc\v York than in lamdon. and lurthonnore Xew York lenders insist upon ; sinknsp; I'usul. whiah is not obligatory in respect to London issues. The esis-

ti ii' o of a sinking fund is one* good . feature of the New York loans, for : a.’.hough this adds to the* annual charge it tends to make borrowers, rather more careful, besides insuring: Sir* gradual repayment of the loan. In the case of the City of Brisbane loan lor 7.500.000 dollars, the lenders stipulate for a sinking fund of 1 percent half-yearly, to he applied in the pur-! cknsc. in the open market, at or below par. of bonds of the current issue, or, 1 alternatively, for the retirement ot bonds drawn by lot. The sinking fund thus becomes immediately effective, and cannot be seized upon by a needy treasurer, as it has been known to be in the past. :