FINANCIAL STRINGENCY.

Taranaki Daily News, Volume LIV, Issue 182, 31 January 1912, Page 3

FINANCIAL STRINGENCY.

! WARNING TO SPECULATORS, ! "The banking returns for the last quarter of last year will not prove pleasant reading, to the business community, as they disclose a tightness of money; as a matter of fact, a distinct upward tendency in the lending rates exists, due to the scarcity «f loanable credit." Such is the warning note sounded in the last of the Mercantile Gazette. "Compared with a year ogo," the article proceeds, "the banks have had to advance £3,838,034 more, and the generous assistance they have given their customers has put a great strain on their resources. The deposits show ho corresponding increase, as they should, from which it may be inferred that the money has .been required ,mainly to meet outside engagements, or in other words, there has been over imporation." The question of a probable financial stringency affecting Gisborne formed the subject of enquiry by a representative of a local paper. Whilst in no way desiring to create alarm, the general riesult of the inquiries substantiated the asertion of the Mercantile Gazette, quoted above, and local business people may be counselled to proceed cautiously. "Yes, it is booming aheiad," was the declaration of one gentleman when approached as the probability of stringency. Locally, he proceeded, there was no reason for such a thing. -Prices were good. He on!j just received advice of one local clip realising lly 4 d, which was satisfactory. Meat l prices yren : also good. But, he added, the balance in London was against New Zealand. There, had been too many importations, too many motor cars, a little too much extravagance, and it had to be checked.

The question of excessive importation, explained another financial representative, whilst it no doubt existed, was not the most serious aspect. Commercial houses i-'iy have over-bought but the assets remained, and all that would be lost perhaps was a little interest and depreciation. A greater factor, to his mind, was the investment of a great deal of money in non-productive ventures. One heard continually 'Of property changing hands at enhanced values, and it was that which accounted in no small measure for the increased bank advances. Looking, at the subject from a local point of view, it. was pointed outrthat a considerable amount of loan money had been expended in the district. The local bodies had been carrying on with large expenditure, whilst railway construction had also resulted in the circulation of many thousands of pounds. These, it was explained, were extraordinary conditions, and the older residents would remember that when the expenditure on harbor works was discontinued many years ago, although Gisborne was four or five times smaller than it is to-day, a long period elapsed during which things remained quiet. Freezing works were established, but even this, did not reflect itself in increased land values and it was some years before a healthy tone was restored. Commenting upon the operations of local bodies, he urged that members of the same should he guided by the same caution as if they were spending their own private resources. There were, however, one or two exceptions. The manager of one large local \finn assprts that his firm were opening fresh accounts almost daily, and that so far as they were concerned there was no stringency, which he attributed to the satisfactory nature, of the business and the resources of the concern. In the course of . the inquiries it was ascertained that the agent for the Public Trustee had been advised that applications for loans could not be received for the next few months. "The public mar look forward to a hardening of rates," was the advice given by ?. local bank manager. °