WELLINGTON NEWS

Hokitika Guardian, 22 February 1929, Page 5

WELLINGTON NEWS

PRICES AND MONEY

ESpecial To The Guardian .]

WELLINGTON, Feb. 19

The advance in the Bank of England discount rate has been promptly reflected in the prices of commodities, and so far a.s we are concerned it is to be seen in the prices ruling for wool. 'I lie sale at Tiniaru is the first after the advance in the hank rate, and at K.at sale, although held the day after the movement in the money market, (here would scarcely be time for representatives to get their advices by cable. Still, there was a distinct fall in values, and this was emphasised at the Christchurch and Wellington sales, the fall being equal to Id to ltd, the finer grades of wool suffering most, it is a question whether 1 lie increase in tbs wool clip will make good the fall in prices. To the end of January, wool exports from the Dominion totalled 221),. •Ki-t hales of which 2t,0,298 were forwarded to the United Kingdom. This total compares with 221,899 in 1927-28, and 181,289 in 1920-27. The quantity shipped to the end of January does not equal half the estimated clip. All our other products suffered through the rise in money rates.

Butter and cheese are lower and so is trozen meat, but the drop in values so far i.s not very serious and export prices are still on a profitable level. Any further disturbance to the money market would be disastrous to trade and commerce and yet it cannot be said that the short term rates for money will not advance. J.t is obvious

..oin recent cables that the managers of the New York Reserve Bank desired to further increase the rediscount rate, and were induced to stay such a proceding at the earnest request of the Treasury Department. A further hardening of money rates there would prove disastrous to the internal and external trade of the United States, and furthermore would have the effect of forcing up the European rates. There have been repeated references in recent financial articles to the “discount” rate of the Bank of England and the “rediscount rate” of the Federal Reserve Bank of New York. There are 12 reserve banks in the United States with a Reserve Board in control in 'Washington. These are legislative creations and must conform to the laws. A reserve bank consists of so many member banks and the central or reserve bank can only rediscount the hills that these member banks have eligible for rediscount. The Bank of England is not so restricted, and is free to discount any bill for anyone, but of course the bill that “this bank handles must be gilt-edged. Short term money is relatively dearer in New York than in London, and it is probable that rates must go higher before there i.s an effective break in speculation on the New York Stock Exeliange. So far as the Bank of England is concerned it will move only when forced to do so by New York. It is the uncertainty of money rates that is responsible for the instability of the price level, and this falls with some severity of the agriculturist. Although the money rates have recently tended upwards our Government lias reduced the rate of interest for debentures sold over for the trend of interest on long term loans is downwards. EXPORT VALUES.

The values of the principal products exported from New Zealand in 1928 shows substantial increases as compar. eu with the two preceding years. Thus the value of wool exported is stated at £10,679,098 and this compares with £12,961,444 for 1927 and £11,830,188 in 1926. The figures for frozen meat are £10,809,962 as against £9,104,701 in 192/ and £8,656,817 for 1926. For butter the figures are £11,302,667 against £10,915,390 in 192/ and £B,695,197 in 1926.

For cheese £6.693,951 against £5,582,596 in 1927 and £5,939,359 in 1926. Sheepskins, £7,924,097 against £1,550,812 in 1927 and £1,544,237 in j. 926, and for hides the respective figures were £1,228,842, £923,262 and £755,654. Of course there were other items of export that exhibited declines but these were mior articles. It was tne wonderful values obtained for the main products that made last year so remarkable.

Tbe total value of New Zealand produce exported in 1928 was £54,660.365; for 1927 the amount was £47,571,233 and for 1926, £44,339,183. The large increase shown by tfie figures of last year were due move to appreciation on prices rather than the increased production, although there was a fair increase in the latter. It is probable that good results will be obtained this year, also, but perhaps not up to the 1928 level.