WELLINGTON NEWS

Hokitika Guardian, 18 December 1929, Page 6

WELLINGTON NEWS

PERVERTED VIEWS OF VALUES. (Special Correspondent ) WEIJjINGTON, Dec. 16. Ever since the war the world seems to have lost all sense of values, and it is considered rank pessimism to even suggest that values of securities, of properties, of commodities and services are all too high. There is a belief, and a foolish one, that the war by some occult means has brought about a radical change in economic laws. We are told that we are living in a new era, necessitating the scrapping of hoary economic rules. In this new era two and two do not make four hut live, and the world has gone crazy over this discovery.

For quite three years the Americans had a wholesome regard for the new economics, of the new era,.,-, and their attachment to the new belief was exemplified in the prolonged and intense speculation in which the whole country participated; This speculation was carried 'to such extreme lengths that the returns on some share investments did not amount to more than 1* to 2 \or cent. The sobered American speculators now admit that the old laws of economics still hold good and that two and two make four and not five.

But share gambling was not the monopoly of New York, for there has been extensive speculation in London, Paris, Berlin, Amsterdam and other centres. In Australia and New Zealand the same thing is to be not. ed though it has been on. a smaller scale. For the past 18 months the Stock Exchanges have been busy, and an Increasing number of men with funds have turned to the Stock Exchage for investment. Now in all the centres mentioned values have been depressed and prices have declined.

In Australia and New Zealand the recession has not gone as far as. it must go, and this is not a prediction but an obvious inference to be deduced from prevailing conditions. In the coming yea? the values of all kind of securities, gilt-edged or otherwise are bound to be lower than they are at present. Mr G. Creagh, Chairman of the Auckland Stock Exchange, in his address at the annual meeting declared that he saw no reason for despondency, and every one will agree with him. Despondency is fatal.

But it was not despondency that was meant but pessimism, for he wished to strike the optimistic note. The role of the optimist is quite an easy one any one can he an optimist for he has merely to make some inane remark such as “Things might be worse.” So far as the depression which had recently been affecting the Australian and New Zealand markets was concerned, he was of opinion the policy of rushing out of good and tried investments at the present time was not "always the wisest;' It is difficult to know exactly what is 1 meant by this, and especially the expression “well tried investment.” We have no doubt that hank shares would come under this definition, and these well tried are having, their values chipped each week as investors begin to realise that share values have been boosted to beyond their true or intrinsic worth and they are now coming down to their proper level. This is not despondency,, but a recovery of business sanity. But Stock Exchange securities are not the only ones that are now suffering from the effects of past inflation, for real estate is in the same position. According to the President of the ( Real State Institute in Canterbury house properties had declined in value by from 20 to 5 per cent in the last two years. A house worth £2OOO two years ago might now be bought for £ISOO, and ho added that directly people came to realise that property values are at rocy bottom they will be inclined to take more interest in the buying of houses. But have values reached rock bottom ? In the opinion of veterans of the real estate market values are by no means near rock bottom and although there Iras been some docline values are still inflated. Some consider that next year will be testing time for securities of all kinds and particularly for real estate.

11l most places buildings, both commercial and residential ha\ r c been erected in excess of the economic nqeds of the country, and it is inevitable that values must decline. The fall in values is not to be regretted, for it will be an indication that the ipeople are recovering their sense of value and their sense of humour. For it will be liumurous to look back on the dazzling values of the past. The sharebroker and the land agent are likely to find 1930 a difficult year.