NO MORE CHEAP MONEY.

Taranaki Daily News, 24 September 1919, Page 3

NO MORE CHEAP MONEY.

VICTORIAN TREASURER'S VIEW. LONDON RATE NOW 5i PER CENT. The financial outlook was diacussed by the Victorian State Treasurer, Mr. McPherson, on his return from London, where lie arranged the conversion of loan moneys amounting to £:),U00,u00. "A higher rate of interest had naturally to be paid in the present condition of the money market," he said. "I was able to obtain the amount required at 3£ per eeni., and to get a loan which was underwritten at par. The most gratifying feature of the transaction was that I succeeded in reducing tiie underwriting charges by y 4 per cent. The advantage in this ararngemeiit lies in the point that in the next decade Australia has £ 100,000,000 of loans to convert, and the reduced underwriting will effect an economy of over £200,000. The underwriters are wililng to concede these more favorable terms as long as abnormal conditions do not exist, that is to say as long as the Empire is not at war, or any other circumstance exists that would make the money market unstable. Providing international relations are on a peaceful basis, and conditions are no worse than they are, now, the lower rate will apply. "The rate of interest which we have had to pay may seem high when compared with flotations negotiated by the States in the past," Mr. McPherson added, "but that the terms are the best that could be obtained will, be understood when I state that the rate is precisely the same as- the British Government were offering on bonds to the public over the counter. No dependency can hope to get money at any time at a lower rate of interest than is paid by th: Imperial Exchequer. My observations in England convinced me that the days of cheap money, like the days of low wages and cheap production, are over. The very best of gilt-edged securities will have to pay high rates, and Government bonds "will not be floated in London for less than 5% per cent. In the course of years, when the industrial position has settled down and business Jms resumed its usual flow there may be some approach to former conditions. All the financial authorities however, are agreed that dear money must continue to prevail, and our finances can be adjusted only from that standpoint."