WAR FINANCE.

Taihape Daily Times, Volume 8, Issue 24, 29 January 1916, Page 6

WAR FINANCE.

IS NEW ZEALAND DOING ITS SHARE? BANK CHAIRMAN INTERVIEWED. WHAT IS BEING DONE TO HELP THE HOMELAND. WELLINGTON, this day. A growing feeling that New Zealand can do more than finance its public works during this time of booming exports and restricted imports, w r as accentuated to-day by the news that Canada has arranged a local loan for the express purpose of making easier the Imperial Government’s huge purchases of produce from that country. The New Zealand output is almost entirely going to the same customer, and your correspondent interviewed Mr. Harold B’eauchamp, chairman of the Bank of New Zealand, to get his views

upon the local money position, and the possibility of assisting the Imperial authorities by the use of our large accumulations of uninvested cash. “The large amount of money at call

in the banks of this country to-day,” said Mr. Beauchamp, “does not indicate that there is no employment for the funds which now stand to the credit of the various depositors, but, to my mind, emphasises the fact that depositors do not consider it desirable to invest in anything in the shape of a lock-up capital until they know the result of the present war. In fact, all classes of the community to-day are in a state of uncertainty. That assumption i s proved, I think,; by the very high prices which all classes of shares in first-class industrial companies command. In point of fact, there is scarcely any stock to-day in a company of any importance that will yield to investors more than from 4| to 5 per cent. This indicates that the public are willing to put their money into investments of that description,. upon the assumption that they can J sell out at any moment, whereas, if ' they were to invest on mortgage, their j money is tied up for long and specific ! periods. 7 I LAND SPECULATION DISCOUR- j AGED. I

“Again,” continued Mr. Beauchamp, “you can hardly expect people to deal largely in land, more particularly city and suburban properties.- True, country lands are still selling fairly free* ly, but for them there is not the same demand that existed prior to the war, for the reason that people wishing to purchase are not encouraged by the banks and other financial institutions to complete their purchase in these abnormal times. Another point of importance in this connection is that it would be ridiculous for purchasers to base their ideas of land Values upon the abnormal profits which to-day we are realising for our products which in many cases are probably 25 to 33- and one-third over the prices nil-

ing in ordinary times.” FINANCING MEAT PURCHASES. It was suggested to Mr. Beauchamp that in view® of the large accumulations' of money in local banks. New Zealand could at least follow the Canadian precedent of assisting the Mother Country by establishing a local credit for the Imperial authorities by means of a local loan. “I do not think that it would unduly disturb the money, market if moderate loans were from time to time raised locally for this purpose,” <■ was Mr. Beauchamp’s opinion. “The Government would use this money to discharge some of the liabilities for which we are now looking to the Imperial Government in the meantime to provide the money in the shape of a loan to this Dominion; in fact, this is proved by the non-effect—if I may use the term —of the recent floatation of the two million loan.” THE BALANCE OF TRADE. The questioner took the opportunity of gleaning the banker’s views as to the effect upon our financial structure of the accumulation of credit in New Zealand’s favour due to the abnormal exports,, with restricted im-

ports. This one-sided movement has not disturbed the balance of exchange to any great extent, is Mr. Beauchamp’s opinion. We have always large balances in London, and in the meantime we are obviating the transfer of large sums from this Dominion to London out of the realisations of our produce. “One thing must be re'membered,” continued Mr. Beauchamp, “that the whole of the Australasian banks are employing their very large funds in London to-day by the purchase of Treasury Bills,' on which they get a very fine return, the present rate being-5 per cent, per annum. In this way they are affording incalculable assistance to the Home Government, and that point seems to be lost sight of in Australasia. These transactions run into millions, and the Bank of New Zealand Is doing this in common with all the other banks in which keep large funds in London in a liquid shade. These Bill s have very short currency, namely, three, six, and nine months, all at the rate of 5 per cent, per annum. The Bank of New Zealand, right from the commencement of the war (l has played a most important part in assisting the Imperial Government to finance the war, without in any way locking up its capital.”