THE MONEY STRINGENCY.

Manawatu Herald, Volume XXX, Issue 438, 3 October 1908, Page 4

THE MONEY STRINGENCY.

Opinions of CommerciaE Men. Low Prices and LocaJ Government Borrowing. The Wellington Kvening Post has been endeavouring to ascertain from promient banking and commercial men the reasons for the present financial stringency and the cure.

The head of a big drapery firm said that undoubtedly there was depression in trade all round. Their house had cut down expenditure, and other houses were acting similarly. It was, he added, for the Government to follow this lead. If they shortened sail iu connection with the expenditure of public money, the depression would not last long. Mr Miles (Murray, Roberts and Co.) stated : The congested condition of the money market is largely accentuated by the uncertainties under which the trading communities are working. The dilapidated condition of the wool and hemp markets forms one of the very tangible cause of trouble.

Mr David Nathan (Joseph Nathan and Co.) referred to the want of confidence on the part of the investor as a contributing cause. ” Look at this country,” he said ; 11 what -security is there for money ? Do you think I could safely advise a friend, if he asked me how he might ’ invest £IOO,OOO in New Zealand ? No ; capital has no confidence to-day.” He thought the banks had done yeoman service, but if municipalities, not only here, but at Home, could embark so largely in industrial undertakings, they did not leave room for the employment of private capital. The unsettled state of the labour market was another factor in the situation. “ Labour,” continued Mr Nathan, “ gives you less value for your money to-day than it ever did. I am connected with an undertaking that is paying ,£3OOO a year more in wages than it did and is getting less value for its additional expenditure than it ever did. People who have money to dispose of shrink from investingit where there is so much uncertainty about its return.”

The head of another big commercial house' pointed out that in addition to the decline in prices of wool there had been a loss ot a million and a half caused to New Zealand by moneys sent away for the purchase of Waihi and Talisman shares.

Yet another authority said there were quite a number of contributory causes, but the principal one was the expenditure by the Government in excess of their borrowing beyond New Zealand. It was nonsense to say that the banks had caused the depression by ‘‘ pulling in,” for, so far from that, the advances this year had been larger than ever they were. Those people who alleged that there had been a corner of the banks to embarrass the Government were speaking foolishly. The banks had their own interests to look to, and nothing so suicidal as a corner would be even contemplated. In four sentences the Mayor (Hon. T. W. Hislop) gave his explanation of the tightness of money;—(i) The revival of industry in Australia, especially in the agricultural and pastoral departments, under which the demand for capital has very much increased for the improvement of properties ; (2) the continued demand in New Zealand for money to develop localities and properties ; (3) public borrowing on the local market; (4) the difference in our accumulations arising from the value of exports, especially wool and flax. The Government, according to the Mayor, has been slaking its borrowing thirst too much at the local fountains, and has not left enough ot the delicious beverage to satisfy small loan-seekers. ‘‘The cure for it, I think,” continued Mr Hislop, ‘‘is steadfastly to determine as far as possible that the expenditure of capital at the present time should be upon reproductive works and works which will increase settlement and swell the volume of those products which are likely to find a ready and profitable market. In the meantime we should try to get our money supplies from London, where money is fairly plentiful at present, and so ease the market.

Mr James Allen, M.P., is convinced that the stringency existing at the present time is more keenly felt in the southern portion of the North Island than in the South Island. In the south part of the North Island a great deal of speculation and fresh settlement had been taking place, but in the South Island the larraer is mainly content to reside on his holding and for some years past has been industriously paying off his mortgages. In the opinion of the member for Truce, the remedy for the existing condition of things is patience aucl prudence. “This latter virtue of prudence is a difficult one to inculcate, and the exigencies of a genera! election seem to have banished' any idea of the exercise of such a virtue. Indeed, the growing tendency for years past to lean on borrowed money cannot be considered other than dangerous. It is no use crying ‘stinking fish,’ but it would be well if we really believed and practised some selfreliance,”

The Prime Minister, when asked his opinion on the subject, declined to go into particulars, but said that from information in his possession he felt very confident that at the beginning of next 3 r ear the supply of money would be very much

greater. He knew of very large sums of money that would come into New Zealand from the Old Country, apart altogether from the fact that large sums of money would be returned to the banks and lending institutions in the shape of advances which would come in from the country in' the ordinary course.