The Guardian And Evening Star, with winch is incorporated the West Coast Times. WEDNESDAY, AUGUST 6, 1930.

Hokitika Guardian, 6 August 1930, Page 4

The Guardian And Evening Star, with winch is incorporated the West Coast Times. WEDNESDAY, AUGUST 6, 1930.

DEFLATION QF SHARE VALUES. One of the effects caused by the iinancinl stringency is the deflation in share values, The figures are remarkable, and probably very few can realise what has happened in the direction referred to in the past few months. The evidence is forthcoming that stored value in popular share holdings has slumped heavily, and in most instances there is little chance of an early recovery to anything approximating former values which were of a steady character, and helped to stimulate investment, The situation means that the share Investor has been hit no less lightly than the producer, and there is at the present a great depreciation in aggregate values representing many millions of money The' Mercantile Gazette draws attention to the matter in a recent issue, nnd supplies concrete evidence of the enormous drop which has taken plate. The financial trouble had its inception in a share boom in most Stock Exchanges, and in particular in New York. But when a limit was reached, the reaction set in, and like the ripples from a huge wave, the decline was felt in most parts of the world, As a consequence and in 'sympathy as it were, there was a drop also in commodity price levels, though this was of more serious general import. But financial holdings were involved just as much as commidifcies. Wool, dairy produce, wheat and so on slumped on a difficult market, and have never recovered. With the contraction in the money value of world trading, the economic system generally was affected, and with companies having decreased earnings, the share values dropped. Stock Exchange values were seriously involved, and the deflation went on steadily. The Gazette says that several of the banking- institutions operating in Australia and New Zealand reduced their dividends, and that in itself depressed values. But the general economic outlook, and the shortage of money for investment, must have played its part. In cases, too, shares held as aii investment have had to be realised on as securities for advances, and this forcing on the market helped also to reduce values. The prospect for the immediate future, has likewise, retarded speculation, especially as in the case of Australia, Government loans at a high rate of interest with national security are offering. The newspaper referred to has tabulated the ten various banking institutions operating in the Commonwealth and Dominion, and estimates on share values, there has been a decrease in depreciation over twelve months of almost twenty-seven millions, sterling value. In the case of nine miscellaneous companies with head offices in Australia,

and some operating in New Zealand, the drop in share values for the same period is twenty-six and a quartet millions. In some nineteen institutions, therefore, in a period of twelve months, the depreciation in share value is over fifty-three millions, which falls on the investors. Evidence of tins character indicates the ramifications of economic conditions, and shows how far-reaching the results can go. Because of this, something of the financial condition of Australia can he realised and the need there is for the earliest recovery. New Zealand is not in as difficult a position, hut unless the situation is controlled in good time, a. similar drift, could easily occur. In considering this aspect of the economic outlook, a glimpse is afforded of the cause for general deflation, and some idea of the conditions contributing to the. effect on the national finances. The Minister of Finance, for instance, can draw very little comfort from the outlook, but as the darkest hour is before the dawn, lot us hope the sun will soon be on the hilltops and begin to lighten up the valleys.