The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, JANUARY 11, 1930. MONEY MARKET.

Hokitika Guardian, 11 January 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, JANUARY 11, 1930. MONEY MARKET.

The Minister of Finance (Sir. Joseph Ward) has thought it wise to increase the interest on New Zealand Government debentures. Financial critics naturally review the position with a political bias, and there is a good deal of that being manifested just now in some quarters. However, Sir Joseph has answered ■ his criticis without loss of time, and he explains how “unforseen contingencies” have arisen very suddenly of late. For instance, the position in the United (States last October had an important bearing on the world’s money market/ The crisis in the stock market in America is now being reviewed as the most serious ever known. Fortunately the country came through the ordeal fairly well, all things considered, but there was a great siump in values, and enormous losses recorded in that respect. Money' was ueaier too, and interest rates went to six per cent, which was a high rate for bank credits. Jn England, also, the Hatry collapse created ano-ther crisis and disorganised the share market, resulting in a heavy capital loss on values. Again in Australia there has been heaving writing down of values, so that these contingent results have had a definite healing on facilities for borrowing, and at the same time have made money dearer, with a much restricted market. Fortunately New Zealand stands in a better position financially' than some of the countries referred to, and interest rates are not as high here as elsewhere. But the higher rates offering overseas not only prevents State borrowing to economic advantage, but also attracts New Zealand money overseas The Minister of Finance, therefore, had to face a difficult problem, it was not considered wise to go on tiie London market, while to attract local investment, a higher rate of interest had to he offered. This latter was the lesser of two evils, and has the advantage of keeping the interest payments in the country, instead of sending the money abroad. At the same time the system depletes the general sum for local investment or commercial undertakings, but if the aggregate sum is not unduly large this effect will not be sto pronounced. The advance fn interest is nominally a small percentage, Imt on large sums it totals big money. Yet, small as the advance is, it is attractive, for added to the higher rate is the fact that the security is State guaranteed. ’The Minister of Finance may lie trusted to handle the general financial situation with ability. As one who has kept his finger on the financial pulse of the world, Sir Joseph is well versed in universal conditions, and knows the money market thoroughly. It is of

importance to note that the Government has no intention of increasing the lending rates for settlers and workers, so tnat it may be assured that the money now being raised at oj per cent. ,s being diverted to some other public iiannel of utility. The Government .nil have had the best of advice regarding outside markets, in relation to the

~1-ice of money, and we take it those markets are not favourable at this juncture. It is very satisfactory in such an cmergneey that money can be attracted for investment locally, which is further proof tile financial standing of the Dominion. The Government, of course, will be as well advised on this fact as on other aspects of the monetary situation, and the course of action t a Ken is certainly complimentary to New Zealand, it is not likely that the increase in the debenture rate of interest will affect mortgage rates for these are governed generally by the lending rates for State advances, and as mentioned above ,the rates are not to be increased. The general position reveals a not unsatisfactory situation at a time when the monetary world is very much upset. New Zealand is apparently able to live- within its own means for the time being, or at all events until the money position of the world is easier.