WELLINGTON NEWS

Hokitika Guardian, 23 October 1929, Page 2

WELLINGTON NEWS

;OLD DOG ST AN !D NEW TRICKS *' ; .1 -rt AUSTRALIAN CONDITIONS. (Special Correspondent) WELLINGTON, Oct.. 21. " , A good many liold the opipipq ’that Australian ecdiiornie conditions have nothing to do with New Zealand, where the conditions al'e different, ancj in no way. related;,tp/Austr alia. - Those who holds such opinions “are woefully wrong, and are lively«tp mislead fhpse who look to them foriaijvipe. ’ft 1 ?' onomic fabric of tha' ciyilised world ■ is too closely woven <f.OP i(uiy one paft not to feej the in another; part; Our trade hnd 'fihancial. connection with Australia is intimate, arid what ' affect the Commonwealth will he felt here. The conditions . inn Australia are far from satisfactory; and they are certain. to become worse before they are better. The salient matters affecting Australia may be briefly recounted.- ■ '■ Before the end of the year approximately £9,579,879/ of. Government arid public, body loans • iißped.ih Australip will mature and mu*t be repaid fir i|r. newed. In March. 1980 thd Commonhealth lbfih of £10,750,900 wi}l maturi}, and in December‘of nextyear nTurthdr loan of £6l,9oo,OOOmfitures/;; Thusi'i* will be seen, that |n the liejtt fourteen month's loans to the amount ’of r oyer £BO millions fall dpe fjfiii newed. In addition the and the Stated will fund* of from £lO nijllions th lions. It is ireported tjiat AherAjisr-aiy increasing scarcity of fppds/fyi rAhatrpf •Hu for investment ih Ailf-hdgedvsequri-ties and this i? shown 1 by the |pct "that of £4,758,000 of Victoria’Ag per/bjmt and o£ per cent loans .which fedoiitly fell due less than halt was verted, the holders of the' other half‘wanted their money. ' /?' /. ■i/ ";

The increase in the Bank qf England rate will make it difficult for Australia to borrow in London except' at 'relative-, 'y high rates, iberft.is, no mioney available in Australiiß,. This make's the; Position of the •Commonwealth' arid State awkward. They must; further cwptfiil; loan «jseivdjture which means oipatingunemploy•uent. and to relieve unemployment the Governments must borrow- % Thus,we •Vet an interesting it will be very tTifficpitt to unravel. In its weekly letter : .%:'lVi;ttlh^rne^flrmi : says' that' circunisfarices; Tor Australia, ffie ar? I-eadj ustment which in other, counties, have been in progress for several years, and Australia has now entered; upon a period of, industrial and financial readjustment which seems lively to , extend beyond the year 1930. i, '/ ( . Australia will’thqreffore' haye for a considerable time, to come a strained money market ;dne to and new loans,* co-existing with secondary industries in a state of; unrest. Furthermore wool , x find Wheat, ' .Upon which Australia depends so, greatly to increase wealth and provide purchasing power, will realise loweiy prices.: ";,/.- , The Australian..,money market .is straihed now and yhe/ strain / Will"•liii crease. Those who want to, borrow or whp must borroW will .be obliged ; to’ pay higher rates of mteresty, ahd tfie • first effects, of this can he seOri already. Stocks ami<; shares .•, by theirnaiure/of' being gilt-edged and yielding- a .low rate of interest are falling in’value, but they will probably go lower.as. the: money market gets-tighter and about, by. April fox May nexf; they will be what: the investor calls cheap. ■ ;•'/!

If money is dear in Australia and is unchanged in New Zealand the tendency will be for'money to'migrate to Australia to take advantage, of,’..the, high interest rate, and such a move-.' ment would cause inconvenience. ’ To check this outflow of credit the hahks will he obliged to raise the New Zealand rate to the. level of Australia. This establishes our, close connection with Australia, and shows that adverse economic conditions in the. Commonwealth are bound ,to be reflected in the Dominion, ,

Industrial,.concerns iri Australia with some exceptions are in a bad way, and the probability'is that the whole industrial structure of the Commonwei Ith will totter next year. Hacket Bros., Ltd., a tannery concern in Victoria, turned into a joint stock company in 1920, lost during the past year £12,-.43 on a capital of £400,000 and no dividends have been paid for the past two years. Allied Motor Interests, Ltd., has done so badly during the past two yearn that the capital of the company, £600,000, is written down to £350,009, the ordinary shareholders thus lose £250,000, and this is the position after six years of trading. A furniture concern in Melbourne known as Ockman’s, Ltd., has closed its year with a loss of £3,276. In the previous year it did not earn enough to pay dividends of £6,000 on preference shares. The New Era Insurance Coy. with issued capital of £BB,OOO, recently had to inform the shareholders that the whole of the capital had gone west. Australia is in for a very strenuous time.