WELLINGTON NEWS

Hokitika Guardian, 20 December 1928, Page 2

WELLINGTON NEWS

CHRISTMAS TRADE AND MONEY. rSPECiAL To The Guardian.] WELLINGTON, December 17. When the banking returns for the September quarter were issued we ventured the opinion that retailers would do an excellent Christmas trade, and that prediction appears to have been fully realised judging by the active business that lias been done this week. There was nothing very extraordinary about the prediction for the figures showed that there was an increase of about L 1,500,000 in the spending power of the people as compared with twelve months ago. The increased spending power was obtained by a careful adjustment of trade balance. While our exports expanded our imports decreased, and the position at the end of September last was that the exports exceeded the imports by about 12 million sterling.

iln other words we sold more to foreign countries than we bought from them, so that on squaring accounts we had the large sum of 12 millions to the good. But so large a sum in our favour, we should have had considerably more thain a million and a half to spend, anty so we had, but the owners of the money preferred to place it in the proverbial “ old stocking,” instead o*f using it in industry and commerce and developing the resources of the country, and had they done so there would have been little or no unemployment in the Dominion.

The money has been placed on fixed deposit, and the position with regard to the free and fixed deposits explains the situation. In 1925 the free deposits amounted to roughly £23J- millions, a decline of £3£ millions. The fixed deposits in 1925 totalled £20:1 millions, and in 1928, £29J millions, showing an increase of £Bs millions. In 1925 the percentage of free to fixed deposits was 128, and this year it was 80.

The Canterbury Chamber of Commerce Bulletin explains thfe matter thus: “The marked variation in these figures are the more striking ifor the revelation of changes in the mass opinion of holders of money. Some part of the change may be accounted for by the difference in the inducements offered to place money on fixed deposit, but it is true also that when business confidence is high a greater proportion of deposits' tends to be kept in current account when it is available for immediate use, and when confidence is low, the proportion kept on fixed where it is sate, tends to increase.”

In 1920 the free deposits were double tho amount of the fixed deposits, that is, when a wave of optimism existed and “ since then the figures show a steady and decided drift towards conservatism, which appears to indicate a great determination to play safe, and now tho proportion of free to fixed deposits is abnormally low, lowbr than at any other time during the past 25 years. It is possible that this drift may be duo mainly to a steadily declining level of confidence in business prosepets, arid if so it is sufficiently marked to occasion concern.”. Tho Dominion is not suffering from lack of funds but from lack of confidence, and tills is more harmful than a shortage of capital. To what extent the Coates. Government was responsible for this lajbk of confidence it is difficult to say but that it was believed to be, to a large extent responsible is evidenced by the mass of electors at the general election. Why should there be this want of confidence?. The resources of the country are as potential and as great as they ever were and the scope for enterprise is large. It is not that money cannot be used profitably in the Dominion, and one is forced to tho conclusion that faulty Government administration is the main cause. The electors have caused a change of ’Government and with that change there, should follow a measure of confidence, and until confidence is restored progress will be impossible. The basic policy of the new Government of using the Advances Office to help farmers and home-builders with funds if judiciously carried out should go a long way to reviving confidence and improving trade and busi-

IICSS. A part of the proposal off Sir Joseph AVanl is to raise the money within the Dominion, and if that is really intended there is no reason why he should not succeed. The growth of the fixed deposits shows that plenty of money is available, and success will depend upon the terms and conditions of the loans. There has been a distinct tendency for money rates on first-class securities to ease, and that is a good feature. No doubt the Prime Minister, who is a very good financier, will realise the great necessity that exists for restating confidence.