WELLINGTON NEWS

Hokitika Guardian, 14 October 1929, Page 3

WELLINGTON NEWS

IMPROVING MONEY MARKET. (Special Correspondent ) WELLINGTON, Oct. 10. The week-end news from London i especting the security and money markets is more hopeful, but that is as much as can be said. The danger of further withdrawals of gold is over, for the exchange rates on Paris and New York have got well above the' gold point. But this does not mean that money rates will case, on the contrary this month is a critical time whe<n Europe will have to pay for supplies of cotton and wheat, and this may again upset the exchanges. The immediate danger of further withdrawals of gold having ended, giltedged securities and particularly Government stocks, which arc extremely sensitive, have responded promptly. But there appears to be trouble pending for industrial shares. The rnmificaions of the Hat rev collapse seems likely to pull down other concerns. It is singular that newspaper companies should be so much depressed, British newspapers are now the properties of groups. There is the IRothermere Group, the Berry Group, the Inversely Paper Company Group and the Horne Group. The latter owns several foreign as well as British newspapers. The Carmelite Trust is associated with the Horne Group. Almost every newspaper in England, Scotland and Wales is in the maw of one of these groups, even the financial papers like the “Economist” and the “Financial Times” are so litd up. It is not quite clear why newspaper shares have fallen, for it cannot be that revenue has deoidied. It is more likely that shares have been boosted up by those in the syndicates and with bad weather in the money market, values have been wrecked. When the English mail of the present date comes to hand it will be interesting to read the details of this igreat newspaper 'collapse. There is very keen rivalry between the various newspaper groups, and the methods adopted by some of them are somewhat peculiar. Recently the Nortlicliffe Newspapers. Lt., started an opposition evening paper in Newcastle-on-Tyne. and issued a challenge to the other evening paper to issue a net sales, certificate. The latter refused, and pointed out that it was notorious that the sales claimed by the Northcliff e Press were the result of a policy of “ buying ” circulation on an extraordinary scale. In return for a promuse to pay 3s to a news agent over a period of six weeks the reader was , offered not only 36 newspapers and a 1

free insurance cover, but also a free ticket to the Exhibition (which wa& then being held), a free meal costing 2s 6d, a free ticket to one of the Exhibition pavilions and three free advertisements in the paper. GOLD AND PRICES. Sir Harold Beauchamp, a director of the Bank of N.Z., who has just returned from a visit to England, has in interviews explained the tightness of the money market and how it originated. Trade in the United States has been[ booming, and thr, huge profits earned, have, in most eases, gone into loans to brokers on tho exchanges. Furthermore, the American trade balance in the pasi year has been largely in favour of that country. Thus, in addition to war debt payments, America has had large sums to draw on trade account. In the past few years Europe has been meeting her indebtedness by borrowing in that Country, and this greatly released the exchange. But during the past year two American loans to Europe have been on a small scale, and, therefore, to meet their obligations European countries have had to send gold across and as European international finance is done mainly through the Bank of England, this old institution has suffered a heavy depletion of the yellow metal. To .protect its gold holding from being further depleted the Bank raised its discount rate and-This; aut'H matically raised the rates oiribafikqisij loans and on credit accommodation genevally. This is the explanation for money being dear at the present time, but this is of less interest at. the present juncture than the effects of dear money. 1 ' ;

It is necessary to- appreciate v hat is meant by the ’ expression “dear” money. We know of course that it means paying higher, rates for loans, but we overlook the fact that it depresses prices, not merely of giltedged securities but of all commodities. One commodity here and there may show a rise in spite of dear money but that in most cases would he due to extreme shortage of the article. We must therefore not he surprised if values for our products exported overseas show* a downward tendency A general fall in price-, will affect the national income, unless of course there is such an increase in the production as to ieqt.i" i. ; ,tl.m pcsitjon, bir chat does not seem, probable. The output of daily I nee shows expansion, but a very dry Summer would upset all calculations.