The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 5, 1930. MAINLY MONETARY.
Tub rise in the bank rate of in to rest appears on the whole to have come as a rather unpleasant surprise to the Dominion. The effect is being discussed variously. It is manifest, however, that there will be a. tightening of finance. After the publication of the last quarterly figures it was generally thought that the outlook was better than might have been expected from the general trend of business. The New Zealand banks were certainly doing their part in helping trade and industry, and there did not appear any immediate check looming ahead. It is probable that the present stringency in Australia lias helped to complicate matters. Australian banks did not show the same support to New Zealand trade as the colonial banks did in in the last returns, but in the circumstances that was not a matter for special alarm. It is a fact that since the new year, stock trading has been restricted, shares generally being not
in, great demand. This quiet state of affairs does not indicate reckless speculation, as was manifest in America lately when a serious financial eruption occurred. On the whole therefore the immediate cause of the increased bank•ate is not very apparent. It may be hat it is precautionary, in case of ne course of events in other parts of me world reflecting themselves here sooner rather than later. The fact that staple commodities are falling in pi ice is going to shorten the volume of money coming into the country, and there will be less of it to go round. On that account the hanks are going to make money dearer. It is suggested, that the attractive internal loan being raised by the Government at 5j per cent, has affected the bank funds but as the money is being spent .largely within till© Dominions, /the general effect of the operation can hardly be serious in the ultimate. There has been a very fair response to the call for money by the Government; which is a healthy sign in itself, but this source along with local body loans, is taking a large Sum of money out Of general trading, and that fact (with the decreased inflow referred to above) is helping the.make money scarcer and in turn dearer. So far as the national borrowing is concerned, it would appear the plight of New Zealand is infinitely better than Australia, where such large sums have to be provided this year, and the governments are in a very difficult position. Here, tiie latest figures published suggest that the Dominion will close its financial year with a surplus. Tlmt was the aim of Sir Joseph Ward from the outset. His effort during his year of office has been to wipe out the' deficit left by the late Government, and build up the credit of the Dominion for the current year. The Prime Minister is in a fair way of acnieving his ‘object, and in the light of world events, it will be rather a notable achievement in all the circumstances. The general situation will be all the better for New Zealand if ■the country can close tiie finnacial year with a surplus. It will be rather an •outstanding circumstance, as it has been predicted that Great Britain will produce a deficit, while Australian State finances are chaotic. The national credit good must help the general credit, and unless it is to check the outflow of finance to Australia where attractive interest will be offering, it does not seem necessary to maintain a high bank rate here for an extended period. One dire effect will be the impress on unemployment which is not going to be lessened by dear money. The Government is asking employers to do more to reduce unemployment, but with dear money that will not be possible, and the “more” will have to be done- by the Government. The increased rate is going to retard development at least temporarily, so that for the time being there will be a general stringency. It would appear the banks are playing for safety, and in all the circumstances of a difficult general financial situation, it is the wisest course to follow.
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Hokitika Guardian, 5 February 1930, Page 4
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715The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 5, 1930. MAINLY MONETARY. Hokitika Guardian, 5 February 1930, Page 4
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