WELLINGTON NEWS

Hokitika Guardian, 2 September 1927, Page 4

WELLINGTON NEWS

THE WOOL MARKET.

(Special to “ Guardian.”) j

WELLINGTON, Sept. 1

The wool selling season in Australasia may be said to have begun for the opening sale of the season was held at Sydney on .Monday last. From all accounts the market promises well, that is to say, prices are likely to continue at their present level at least

for a time. It is 'true that Bradford and Boston are not quite satisfied with the prico of the raw material and would like to .see a lower range of values ruling, but in both manufacturing centres the costs of production are higher than on the Continent of .Europe. One authority says that the Home trade leaves very much to be desired, there being sadly too much standing machinery among combers, spinners and manufacturers. Some are beginning to think that the renewals of machinery and enlargements of mills that took place during, the war period and immediately afterwards were overdone; that there is too 'much machinery in the world, and that the fabrics are being produced faster than they can he absorbed by the population of the* world. Tin's view of the situation is discredited when one takes stock of the needs of the .'Near East in particular. But for high import duties and the poverty of the people in Russia, Czecho-Slov-akia and the Balkan States, these countries could take much larger quantities of goods. The .Tidy wool sales in London were particularly satisfactory. Germany and Franco were good buyers, but did not exceed expectations, while tbo Home trade purchased considerable weights. ihe special correspondent of the “Economist” (London) writing of the fourth series says: “Every day big weights of crossbreds have been catalogued. Now Zealand is turning out increasing quantities of seoureds and slipes. and all qualities of the latter have sold at the best values paid this year. There has been an extraordinary demand for slipe lialf-bred lambs and the advance in prices has exceeded expectations. This should help the balance sheets of the freezing establishments and the sheep breeders throughout New Zealand. IVc sec no reason why slipes should depceriate in value for the next- four months.” LOANABLE CREDIT.

There is unquestionably a shortage of loanable credit, and this is indicated by tbo high rates of interest that are being paid on debentures issued by private companies. In the last issue of the “Mercantile Gazette there was a debenture issue of £50.000 upon which 8 per cent interest lias to be paid: there was another lot of dohontum carrying Si- per cent, and on another issue as high as 10 per cent was the interest rate. There is a persistent demand for loan money, and those engaged in banking and finance are keen competitors for deposits. The bankers who have to provide tbo finance for moving exports and imports are very restive just now because of the unfair competition they are up against and especially from the Post Office Savings Bank. Although the deposit limit is to be gradually reduced from £SOOO to £SOO. tiie issue of short term, currency certificates at compound interest, which in most cases is higher than is allowed by tbo trading banks is resented bv the latter as being unfair. The Post Office Savings Bank does

not -y'ir Income tax and is not com-»vdl-d maintain a reserve fund. The trading banks in respect to income tax are charged 30 per cent on the average of their assets and liabilities, they must maintain a certain reserve against their liabilities and there is also the .note tax. If the Post Offieo Savings Bank bad to meet similar charges then the trading banks would ’mve no cause for complaint. o Post offee Savings Bank thus bolds a commanding position and can therefore offer higher rates of' interest and better interest than can tbo trading banks. There is no justification for the issue of currency certificates which are in effect fixed deposits ranging from one to five years with apparently no limit as to the amount. Tin's does ' not conform to the true principle of a savings hank. The Post Office Savings Bank is being used as a vehicle by the Government for obtaining short-dated loan funds. This competition for deposits prom- J isos to become keener, anil if the ! banks are obliged to raise their rates for deposits then wo may see the overdraft raised to 71 per cent if not 8 per cent.