THE MONEY MARKET.

Manawatu Herald, Volume III, Issue 58, 22 March 1881, Page 3

THE MONEY MARKET.

[By Traveller.] This is a subject that deserves the most thoughtful consideration at the present time. I noticed in your issue of last week a suggestion from Mr Sutton to the Colonial Treasurer whereby the present large Btock of money might be kept in the colony. We learn from nearly every newspaper in the colony, from every bank report, and from various other sources, that there is more money on hand than can be profitably and safely employed, and this fact should lead to the enquiries— How is it ? What does it mean ? It is only a very short time since I wrote to you on the depression, and a few of the causes that led to it, and it is not long ago since money was lent at 12, 15, and up to 20 per cent, interest Now, money is advertised at 7, 7i, and 8 per cent ; yet the depression i 3 still felt, and scarcely anything abated. These sudden and capricious changes are very detrimental in their effects, and call for some fixed scale or legislation whereby a more uniform rule of interest might be maintained. Surely this is not a subject beyond our legislators, or one so beneath them that it is unworthy of their notice. Just look back to two years ago, and from that date ncarlj up to the presentlook at the harshness that has been practised by the monied class and monied institution*. For some reason or other Banks were tightening up and callingfin overdrafts. The result was what might naturally be expected. Scores of good men had to file, but before this evil took place properties were forced into market to such an extent that property went down in value to nearly half what it would have brought in earlier days. Men were so paralysed by the pressure brought to bear on them that legitimate improvements on country estates had to be abandoned ; laborers were thrown out of employ ; in fact, throughout eveiy form of business and stratum of society fear and trembling and stagnation were the order of the day. The questions are, Was this justifiable or necessary ? Was this so-called purging and weeding out of rotten speculators and reck less traders a necessity ? Well, it might have been to some extent ; but certainly not to the extent that was carried on, for lots of better men fell victims to the crushing process than those who have stood ; and lots of land rings held a monopoly of Bank money when legitimate tradesmen were refused a fair amount of accommodation. I forbear to quote instances lest I should come within the borders of the law of libel. I shall merely content myself with drawing the attention of your readers to instances that have already appeared of Bank managers having been dismissed for apropriatipg money for the benefit of speculators with whom they shared in the plunder ; and how many instances are there of such trading that have never come before the public eye, when managers have not been so promptly dealt with ! This shows that the purging process never reached those that it should, and fell heavily on many an honest struggling man. A change has now come over the spirit of the dream. Money is abundant, and a fear is entertained that some of it will ere long find its way back to England. Well, it wonld not be strange if it did, and not much loss either ; for those who have the control of it for the most part are either ignorant of the value of securities on which they are supposed to invest, or are so tied up by their principals at home that the money (although in the Colony) might as. well be out of it for all the good it is ; for the leading agents, as I said, already are almost impossible to be satisfied with security. A few instances will show what these lenders think of securities, and these are instances that have come under my own notice, and for which I can vouch. A borrower offered a security consisting of country freehold land, valued by the Road Board valuer and others at LIO,OOO and in addition to this several '<ouees had been erected thereon and insured to their full insurable value. A loan was wanted of £5000 for 3 or 5 years, at 7 or 8 per cent, those being the ruling rates. The reply was — we do not think there is margin enough, and Road Board valuations are not always reliable ! Town securities have been offered, both in cities and country townships, and these have been refused (at least in the majority of cases) on the ground that they do not j care for town security, and particularly when insurance on buildings constitutes a large portion of the security, &c. Thi3 is a fair specimen of most of the replies which are received by applicants. I know of an instance -where a 1 man with £30,000 -worth of freehold land got a loan of £10,000 ! at 7 per centj and this is the only loan of any importance that I do know of. The tone of the money market is such as almost to preclude borrowers, lenders are so hard to uatißfy with security. Now, who are to be relied upon, if local men and public valuers are not ? And how can the country ever be developed and improved if lenders will adhere to their present niggardly policy? Or how can other industries or legitimate trade ever prosper so long as suoh a policy is in existence? People are now perfectly afraid to go to Banks for assistance after the experience they have had. All this goes to show that the market wants to be regulated in order to prevent panics, and at the same time to affori a supply of money at a fixed reasonable rate of interest. I could point out various reforms, but I fear this note is rather too long already, and ' hope what has been said will awaken an "~ interest in the subiect by those roost competfcHt to' deal with it.

Overheard, at Coney Wand, recently : " Charles, I hate this horrid surf ; it makes me keep my moutfc shut." Charles sarcastically replies," *"^»ke some of it hem* with 70a."