MONEY GOING ABROAD

Manawatu Herald, Volume L, Issue 3890, 3 January 1929, Page 1

MONEY GOING ABROAD

LOCAL INVESTMENTS. INCREASE IN STATE LOANS. .Dealing with the financial position of the Dominion in the course of his address at the annual meeting of the Dunedin Stock Exchange, the chairman, Mr. Harman Reeves, said that money was more plentiful to-day in the Dominion than it had been for many years past, and the trend of interest rates was downwards. A big.factor in creating this surplus money from the salo of our products, was the fact that the State had become a large lender of money. Where years ago all the financing of farmers and others was done through the banks, loan companies, trustees, and others, to-day the great bulk of these advances were being ntade by the State.

The trend of the State becoming the only lender might become dangerous t’o the well-being of the community, as some day the borrowers from the Government might become so numerous that they might get a strangle-hold on the Government of the country. In the last four years no less than £24,000,000 had been lent by the Advances to Settlers Department alone; less than two years ago large sums of Australian money were invested in New Zealand public bodies debentures, but the last twelve months very little had come to this country for that purpose.

It had been stated that too much New Zealand money iwas being sent to Australia for investment. He was sure nobody regretted more than the stock-brokers the necessity for this, but their great difficulty Was to find sound New Zealand investments for their clients. In their absence it was necessary to look further afield, and naturally turn to Australia, their nearest neighbour, for. their requirements, although a large amount also went to London. He did not think it was too much to say that at least anything from £2,000,000 to £3,000,000 of money had been going annually from this Dominion for the purchase of shares in Australian banks iand for various Australian and English investments. Proceeding, Mr. Reeves said he thought it had 'been suggested somewhere that the payment for the completion of the railways—a doubtful proposition in view of the success of motor traffic —could be defrayed by the issue of New Zealand Government debentures to the contractors. The Stock Exchange should, in his opinion, strongly protest against the adoption iof such a course of payment. The completion of-the railways or any other Government woi’ks should be paid for in cash only. It would be a blow at the very foundation of the finances of the Dominion, and more particularly on the London market, if a form of “greenbacks” got into circulation in , the shape of payment by debentures. “Contractors when they received their debentures Would .naturally require to turn them into cash by selling them, and if they happened to strike a weak market they Would be forced to accept a considerable discount, with the result that all Government issue would be correspondingly affected. Beside* this, to issue such debentures would shatter their financial standing and good name on the London market. ,The loans already issued in the Dominion amounted to over £107,000,000, and in justice and fairness to the lenders of these issues it was not advisable to have further issues other than for cash.

In conclusion, Mr. Reeves stated that 'the general outlook was never better and that every branch of ibusiness and trade could look forward in the coming years to prosperous' times and increased business.