The Financial Situation.

Opunake Times, Volume II, Issue 73, 15 March 1895, Page 3

The Financial Situation.

(Contributed.) That the finances of the Colony, and indeed Australasia generally, are in a most unpromising condition, we most of us unfortunately have good reason to know; but to find the several first causes of the special wave of depression at present passing over us, ■ is puzzling the brains of able financiers. For New Zealand to pay its way in England it has to export more than £3,800,000 worth more produce than it imports, most of which surplus goes to pay interest on its burdensome National Debt to British financiers. Unhappily at present produce is down ; or conversely gold is up, for,the necessaries of life, should be the basis of valuation of currency. By trade returns although we exported more bulk of produce last year the value of exports shows a falling off of £2,848,000. At present prices we have to send home nearly double the amount of wool that we did two years back to give the same value, yet whatever be the value of our products the annual tale of shekels to the world’s pawn-shop has to be made up or else we get deeper into the mire. Now rises the question : What is the cause of the depreciation of prices ?—over .production,—That is theoretically impossible as long as there are people in the world who, toil as they will, can barely get sufficient of those same goods with which the market is supposed to be glutted. Rather, we think the present flatness of the market is owing to general distrust and want of confidence in the future, coupled with decided aversion to invest capital in speculative enterprises and reasonably, sound investment, although yielding low interest is eagerly sought for. Tn spite of the financial embarassment of the colony N.Z. 4 per cents stand at and 3£ per cents at 101 £ hitherto unknown prices. British 2£per cents are at 6s premium and, America’s new loan was subscribed ten times over and quoted in London at 4 per cent premium. This plainly shows the avidity with which entirely safe investments are sought after to the detriment of private speculations. All over the monometallic financial world are enormous reserves of gold lying idle merely because financiers are unable to find sound investments for the capital lying in their hands. Banded estates in England are now one third to one half their value of ten years ago, simply because the British farmer is unable to both make a living and pay his rent, and so this state ol things will continue as long as gold is the sole basis of valuation. Why should gold, a substance that has very little intrinsic value be made an autocrat of the destinies of men ? Haw inuch worse off would the world at large be, if by some revolution in nature, all the gold in the universe should suddenly volatilize ; or if gold should suddenly be found in quantities like coal. It would simply drop out of place as the king of metals, and some other, and we hope more rational, basis of exchange would be fixed. If gold ever were found in large quantities the effect between nations would be stupendous. Since silver has depreciated more than one half of its price of twenty years back the whole of the Eastern world in which silver is the basis of commerce has benefited theinjury of Western interests founded on gold. To the European manufacturer the Indian market is closed, and as the rest of Asia becomes civilised to our notions, those markets will not only, be closed but the silver-using Oriental will be competing with the gold-using Occidental on his own ground. Anomalous as it may appear could enough gold be discovered in Australasia to depreciate its value to any practical extent, first, the colonies would benefit at the expense of the British bondholder, since produce would be up or gold would be down (the terms are convertible); next the British Capitalist would benefit at the expense of other European nations through his relations to the source of gold, then the whole gold-usiug world would benefit to the injury of the silver-users and finally their lot would be improved by the increased vitality of commercial enterprises through the world. So may it be.