FINANCE AND TRADE.

Taranaki Daily News, 9 December 1916, Page 7

FINANCE AND TRADE.

AN INTERESTING REVIEW, BY CHAIRMAN OF BASK OF N.Z. Wellington, Yesterday. At the half-yearly general meeting of the Hank of Xe'w Zealand to-day. Mr. Harold Heauchamp. chairman of directors referred to the lending feature? of the present financial and industrial position. He said:— The military situation may. T think, he described as an improved and 'mprov-. in.C one. There is reason to believe (hat our adversaries' reserves of fighting men of the best oualify are becoming exhausted, and (hat (he reinforcements he will in future be able to command will consist of material of a decidedly inferior class. AYe, on (he other hand, are bringin? into . the field new troops of splendid physique; efficiently trained and equipped, and all fired with an entV.sinsm ■which draws its inspiration from the conviction that we are figlilinp: in a righteous cause and that victory, though it may lie long delayed, must eventually be ours. And we civilians share with our ■soldier 5011s this same imshakeable conviction.

A review of what has been achieved in the campaign of last summer and auluinn fills us with hope for the future AAV cannot, of course, expect much effective work to be performed until the winter is past, but we lock forward with snnsrnine anticipation to the opening of next year's spring offensive and in the fervent hope that the operations of IfllT will be effective in crowning the Allied •irms with victory and bringing the war to a swift termination. From a reliable source we hear that, 'n less than six months hence, Greet Britain's industries and resources will be 'Df.bilised to such an extent, that she. will ''a able to supply all her own reonive mints in respect to ammunition and bis ■runs, and largely assist her Allies. THE FIXAXCIAL ASPECT. Passing from (he military to the financial aspect of the war. with which this address is more nnturallv concerned. 7 would remark that one of what mav K called the wonders of the war has been the marvellous ease with wliieh, so far. the enormous financial requirements for military and olher purposes of Gre» Britain and her Allies have been met whilst at .the same time London has maintained its traditional reputation as a free gold market.

At the end of September the rate for Treasury BUIs was fixed at 5J pe' cent, for all currencies, and a new issue of Exchequer Bonds was announced carrying interest at (i per cent, and maturing en February 1(1, 1020. The design of this arrangement was doubtless to divert, money from the short-dated Treasury Bills (of which an enormous amount some £1,040,000,000 wen current) to the longer (though still short) term Exchequer Bonds. '1 ho effect of the new Exchequer Bond issue on a 0 per cent, basis was very depressing upon all Investment Stocks, and a permanent lowering of quotations on tin exchanges took place.

The British Government appears ti l.rofer finance meantime on short dated bonds, and is apparently desirous ol postponing the funding of its floating liabilities in the expectation that some d> ciiled change in the war situation, in favor of the Allies, will afford the op portunity to float a loan on more favor able terms than would at the present time be obtainahle. The amount tlnir outstanding on these short-dated obligations «t the prpsent time exceeds considerably £1,000,000,000, or, if Eydic quer Bonds be included as short-dated obligations, £1,500,000,000. BRITAIN'S SELF-RELIANCE. The total British Government borrowings since the commencement of the war amounted, at September 10 last, to £2,405,209,000, and as the expenditure is at the rate of about 5»/ 4 millions per diem, the debt will have since been largely increased. And still the outlay goes on. Britain is, however, becoming more self-reliant as time passes, and is consequently spending less outside and more within her own borders. This means, of course, that while the indebtedness of the State as a collective unit is enormously increased, the wealth of the individuals, constituting the State in which the borrowed money is expended, is also largely increased. The well-being of the individuals comprising the State is promoted, though the State itself may be driven to the verge of financial extremity. Britain, however, in the meantime is in no such extremity. Her Chancellor of the Exchequer, in an announcement on the subject a short time ago, stated that the country's finances were absolutely sound, and that, assuming the war continues until March 31 next, the existing taxation would cover all the necessary peace expenditure, provide all the interest on the national debt and a sinking fund which would redeem the whole debt in forty years, and, moreover, give a surplus which would admit of the abolition of the excess -profits tax besides reduction in other taxes. Surely a country with such a record might cheerfully face a future of darker portent than that at present in. view. As an American writer has remarked: "When the history of the war comes to be written, it will be found that the wealth of Great Britain, and the genius of her financial men, have been predominant factors in defeating the aims of Germany. Who can doubt that just as the genius and resources of Great Britain have proved equal to the task of financing this war, so they will prove equal to the task of reconstructing the national life on the conclusion of the war?" A TREMENDOUS CHANGE. The war has effected a tremendous change in the financial position of the United. States relatively to the rest of the world. America has, for the time being become a lending nation, and having regard to the wonderful expansion of her exports to Great Britain and other countries, one does not wonder at the growth of her wealth. • Gold has been poured into America to such an extent that Americans are now coming to regard AvLth disfavor settlement of indebtedness • by that means, because shipments increase to an ahnoimal and unnecessary extent their holdings of unremunerative funds, and, It is apprehended, accumulation may lead to a period of reckless speculation in an endeavor to provide employment for idle resources. THE NEW ZEALAND POSITION Turning now to local concerns, I may remark that in this Dominion producers eant.Lniie to experience ft period of

'.-.'■•r<!^l***»''« phenomenal prosperity, ami our staple products are realising prices which, it may ho said have never before been obtained in the history of the country. •Niioe early in 1'.11.j, the Dominion's meat output has been purchased in the interests of the Imperial (Jovernmeut on a fixed and remunerative basis as to prices, and the am.* ement has recently been renewed till the end of the war oii somewhat more favorable term? to the producer. A portion of the cheese output for last sen-mi wns also pur■based on behalf of the Home authorities, and arrangements have recently been made to similarly take over the Dominion's wool clip for the coming season.

Throughout the whole country an exceptionally favorable season luu been experienced, and the yield of every description of produce promises to he bountiful The area of land under crop is somewhat restricted this year owing, to some extent, to the difficulty that is being experienced in obtaining the necessary labor to cultivate the land and harvest the crops and niso, in a measure, to the relatively higher prices ranging for meat and wool. SLAUGHTER OF STOCK. It is to be feared that the high yield for meat is inducing prodigality in the slaughter of stock, and there is reason to apprehend that our flocks arid herds arc being reduced in numbers to such an extent that the adequate stocking of our pasture lands will, in the near future, become a very difficult problem for our farmers. More especially is this remark true in the case of cattle, of which class of stock a more than ordinary number of young beasts are finding their way to the slaughter-house. Lambing has generally been good for the whole country, and this, in some measure, will compensate for the excessive dram that has been taking place upon our sheep stock. TRADE AXD BUSIXESS GOOD ' ■ The state of trade and business throughout the country is, on the whole .'ood. The excellent prices wliioh have been realised for the past two years for im- staple products and the large ex'penditure of borrowed money that is in progress in connection with the training ■tnci equipment of our troops for oversea service, have placed the people generally <\i an easy position in regard to resources uul they are displaying the usual liberality, if not prodigality, in the expenditure of the abundant funds that they liar uailable. Traders in luxuries, such jewellery, soft goods, etc., have been doing exceptionally well. Land and agenci business is fairly <iuiet. The building trade is severely handicapped by tin shortage of skilicd labor and the high prices of materials; and operations in I his industry are confined mainly tu necessary works.

There, is little change to chronicle in the state of the money market. Mortgages still continue to be raised and renwed at rales averaging as a rule 5} per cent, to 0 per cent, and the effect o'" the £8,000,000 local war loan, which the Government placed, on the market in | August last and which was over-sub-scribed, has not apparently been to harden the market to any appreciable extent, at any rate in the meantime The cost of living is steadily increasing, and the high prices to which the necessaries of life haA'e advanced are imposing a heavy burden on the wageearning and small-salaried classes. The Government, with a view of placing a cheek on the upward tendency of (he 'pi-in of butter sold for local consumption, fixed, by Order in Council, ttu 'maximum wholesale price at which but|ter destined to be retailed in Jic DuJ minion should he sold; and iu order to compensate manufacturers f >r any losses they may sustain through selling t'or the local mavkt instead of exporting, a levy at the rale (at present) (f th,-ee-far-things per pound of butter-fat used, was made on all butter and cheese factories, and the issue of a license to evport was made dependent on the payment of the levy. The principle underlying -he Government's action is a vevy important one both to producers ar.d consumers, and its operation as regards butter will be ratched with interest. SATISFACTORY TRADE RETURNS. The trade returns of the Dominion exhibit a very satisfactory position. In each of the two complete produce years that, have passed since the outbreak of the war there has been a very substantial inocasa in the values of the Dominion's exports, as compared, with the previous year. Exports. Imports. £ £ 1312-13 ".. 23,(182,410 23,888,354 1013-14 ... 23,759,3W 21,050,384 47,441,703 43,024,738 1914-15 ;.., "20,710,434 19,75fi,224 1915-10 .. 34,920,541 23,791,152 04,030,973 43,577,370 These figures show that the excess of exports over imports for the two prewar years was £3,517,025, and the excess for the later period ,£21,059,599. Turning to the figures for the year ended September 30 lust, viz.. exports £34,920,541, imports £23,73],15-JP-an analysis of the export, futures shows that the increase of £5,210,107, as compared with the preceding year, is due mainly to higher values, and not to increased quantities. Imports show an increase in value for the year of £4.004,928. This is a large increase, winch in normal times would call for more than passing comment, hut under present conditions it is duo to higher values of the goods imported and the execution of belated orders. The prosperity of the country tends to encourage extravagance in expenditure and in methods of living, which in ordinary course results in increased imports; and from that point of view it is perhaps not a. bad thing* for the country that inward shipping facilities are in some measure restricted. The banking returns show an eminently satisfactory position. The combined, deposits of the banks received from the public at September 30 last, compared with those of September 30, 1015, were ns follows:—lnterest-bearing deposits, 1915, £11,009,000; 1910, £12,-non-interesl-bcariug deposits, 1915, £17,545,803: 1910, £19,020,071; totals, 1915, £29,154,929; 1910, £32,599,1100., . Government deposits show la.-ge increases, the etnsequence of the inclining of the local loan moneys, and the large rcver.vcs resulting from the taxation imposed under the Finance Act, 1915. Note circulation shows an expansion of £1,507,140. This is not the result of any increased activity in. the trade of the Dominion, but is occasioned by the complete suspension of gold settlements b-3-tween the banks, settlements of exchanges being now made in the legal tender notes of the sp.tttivifl' tuml-a

Advances also show .expansion :o the extent of £1,U2(),50!), tlic figures being as follows:—Discounts, Sept. 30, lillii". £l,:ir)7,US3; Sept. 30, IMb. U,«B,S;;s; advances, 101.'), 121.'.1!)1,222; IIIKJ, £2V 24!),l:Sli; totals, 1(115, jJ2:J,;MS,!)O.-)i PJlli, 124,P77,91U.