DEARER MONEY.

Taihape Daily Times, Volume XI, Issue 3520, 6 July 1920, Page 5

DEARER MONEY.

b"l‘ROl\'(u‘r 'UPVVAR]’) TENDENCY.

CHECK ON SPECULATION

CHRISTCHURCH, July 5.

g In its commercial columns the Press i to—day contained a statement that, although apparently there is still a fair amount of loose money about, investors are showing signs of disinclination to lend at rates that have heencurrent 9 for some time past.‘ 'l‘o;da.y’s rates of «interest here are. lower than in any ‘Luther portion Qfl_..t.ll_o ‘British Empire. II Dlll-inggmthe past_;mo'nth‘ there has been ‘a “fa.irly ‘strong call for mortgage nloney,|’a.nd the supply is now somewhat short, with aqtendency for lenders to .hold for better rates, which are nominally s§_to"6 per, cent. The Sun to-night says”s__“An important development in connection, with the money market in imminent.‘ The bankers are to announce an increase in the rate of interest;on.,'overdra.sfts from 6 per cent. to 6% per _cent_.," the. advance to take efiect frohl‘July 15. It is in conformity with the trend towards dearer money, which is making itself manifest in other countries. It has a, distinct relation to What appears to be the general policy amongst banks-—an attempt to check speculative -methods of trading by limiting credits. This system of increasing the overdraft ra"t.e when “the trading position seems to call for exercise of caution is rather a traditional method on the part of banking concerns. The making of financial accommodation more expengive naturally has an efi’ect on specula—tors and on importers, who Would other--wise be prepared to take rather more risk than usual. There is a tendency apparent to hold it, with the idea that rates of interest will rise. The trend‘ is evidenced in the case of the debenture issue -of a powerful manufacturing company which has just been registered. It is oifering 6-1» per cent. free of income tax. The increase in the rate by banks means the addition of onethirteenth to their earning powers« in the matter of discounts and advances. As to how far "the price of goods will. be afipéctedfldepends largelyon Whether the trader had to secure‘ long or short credit from the banks- | V '