WELLINGTON NEWS

Hokitika Guardian, 29 June 1928, Page 4

WELLINGTON NEWS

INFLUENCE OF SPECULATION

(Special to “ Guardian.”)

WELLINGTON, June 28

Is there such a tiling as the influence of speculation? A moment’s reflection is sufficient to convince one that speculation may jaxereise influence that arc both good and bad for the trade. For some years certain groups of primary producers have decried the speculation as inimical to the interests of tlfo farmer. Their views have favo’.irly impressed a number of their fellows, and the activites of merchant dealers have diminished considerably. This position was not brought about by persons exposed to speculation, but arr.se because dealers had had unprofitaUle experience, in recent time;. Agriculturists are now beginning to realise .that merchants exert a valuable influence in the markets. They still have the support of a. few traders who deal in fairly extensive quantities of cereals and other products, but whose weight is now insufficient to create a market.

On the other hand they are frequently responsible for the maintenance of prices at a level which otherwise would not he reached. The fact- that traders are interested in a market imposes some cheek upon any .substantial decline in prices. In Australia, comment has recently been made hv farmers, and reference has been made to the dullness in trade owing to the absence of the speculative dealer. This influence is also recognised by some of the wool-grower*. An instance is cited where a grower was offered a very attractive price for his wool on the farm. When he consulted his agents, who usually handled his business it was indicated to him that the price was very good and warranted acceptance. The grower, however, refused to sell. His explanation was that the practice of selling wool direct to buyers was so increasing that he feared that ultimately it woidd have an adverse effect on the recognised market. Other woolgrowers expressed similar views, and told their agents that they intended to soil their wool through the usual channels.

AUSTRALIAN CONDITIONS. The economic conditions in Australia have a more or less direct influence on the conditions in New Zealand, and the reverse is the case to some,extent. It is not always possible to get n fair and unbiassed opinion of the prevailing conditions from an authoritative source, hut recently the National Bank of Australasia has adopted the practice which prevails in Europe and the United States and issues a monthly review. It is a pity the same thing cannot be adopted in’-New Zealand. The Bank of .Now Zealand is tlie only institution that could handle the matter. hut the hank’s direct connection with the- State makes that a delicate and difficult matter. In i l s last monthly circular the National Bank of Australasia says that trade 'turnovers generally are below last year’s levels. Tn the Eastern States unemployment shows no sign -of abatin';. There is considerable distress in the Industrial suburbs of the large cities which is being alleviated l-.y charitable organisations, while, relief works !mv: r-ec.n provided by Oovcnnnr;.; and mnn::-i palilies. In Vi- -■rKsoual conditions in all rnr,.l districts arc extremely fnvicr for the time of year than for many years pa si: Most manufacturers arc .tv -king wish reduced stab's and difficulty is being c-xpcrienced by some of them in the collection of book debt-, the real estate busines; is all. and in the city properties are difficult to sell at prices well below the levels reached under speculative influences during recent years. .Sellers are holding off the market in the hope of improved prices later. The long-existing shortage of heuses has Icon overtaken, and the building trade is inactive. For the first .rime during the past six or seven years a surplus ef dwellings is available for intending tenants. There ae mere shop premises vacant in Melbourne and. in inert snrburbnn districts and rents show a declining tendency. There has been a falling off in the amount spent oh amusements, Particularly picture theatres, though for some forms of entertainments receipts are well maintained. The con-ditions-in Australia are very similar to these in New Zealand, showing that the same causes are operating.