WELLINGTON NEWS

Hokitika Guardian, 30 June 1931, Page 6

WELLINGTON NEWS

DEMAND FOR MONEY. (Special Correspondent!. WELLINGTON, June 26. It is pleasing t-o note that the two Banks closely associated with the dominion, that is the Bank of New Zealand and the National Bank of New Zealand have both done well. The Bank of New Zealand paid the usual dividend and bonus of 1 per cent, and the National Bank is paying 10 per cent, the same as in the previous year. But last year this Bank cut out the bonus of 2 per cent, making the distribution 10 per cent, and this has been repeated this year. Some people view Bank balance-sheets and Bank returns rather qneerly. They see huge amounts on deposit with the Banks, both tree and fixed, and forthwith assume that there .is plenty of money available. They fail to take note of the assets side, if they did, they would realise that Bank assets consist of the debts due by the public to the Banks. The advances are debts of the public and assets of the Bank. I here is thereloro no great amount of capital. The free deposits and note circulation represent the current spending power of the people. The fixed deposits, which l-'-v'e steadily grown during the past five years may he viewed as investments money, that is the owners could invest the funds in long term securities and that the funds are not, so invested is an indication that the owners are unwilling to invest because they are lacking in courage and confidence, or because they can find no investment of a- suitable character. The Government is offering for sale over the counter 6 year debentures bearing interest at o\ per cent. This, one would imagine, was good enough hut it is not being taken up readily, because 51 per cent, bonds maturing in 1936 can be obtained at a lower price than the debentures that are being sold over the counter.

The Dunedin Chamber of Commerce is urging the Government to cease selling 5.] per cent Debentures, and to offer not more than 6 per cent, and suggests that local bodies and state departments should do the same. The desire of the Chamber of Commerce is to see the price of money decline, is certainly very desirable, hut the price of money cannot he lowered or raised except through the operation of the economic law of supply, and demand. The rate is comparatively high just, now, be<jmse the demand far exceeds the supply. -Apart from the sale of debentures by the Government, the Christchurch Drainage Board is endeavouring to obtain about £35,000 by the sale of oh debentures, yet the market price of similar debentures is well below par. In addition to these issues, several companies are offering for sale bonds o.‘ various denominations, Timberlands, "Wood Pul]) Ltd. has been offering £1 bonds and is authorised to issue up to £1.216.099. The. New Zealand Tung Oil Co. Ltd., is offering £3O bonds, the ' Paren<'*u Tinned Oil Ltd. is offering 10.000 bonds of £3O each. The Northern 'Tung Oil Co. is trying to place 1000 freehold debentures of £25, Natural Products New Zealand Ltd. is offering 4.000 Cooperative bonds of £25 each. The Pre-

mier Tobacco Co. is trying to place 50,000 shares, and the Investment Executive Trust is issuing 7.500 shares of £L each and 250.000 shares of 2/each. The Papuan Rural Products Ltd., an Australian venture, is issuing 40.000 bonds of £2O each, and it is hop-

ed that some of these bonds will be taken up in the Dominion. These company promoters are obviously very optimistic but they are bound to he very disappointed with the result sc The country does not appear* to have surplus funds for investment, and little enough for existing concerns that want to increase their capital resources. This extraordinary demand for capital is keeping up the rate of interest and no efforts on the part of tile Government can alter the position. The Government, could of course decide on paying 5 per cent., hut in that case very little money would come into Treasury from the sale of debentures.