THE LOAN FAILURE.

Taranaki Daily News, 25 October 1919, Page 11

THE LOAN FAILURE.

. NOT ATTRACTIVE ENOUGH'.POINTS ABOUT THE MONEY MARKET. Why did the ten million loan fall short of expectations? The question ■was the basis for some interesting comments by a banker who was approwfied by a Lyttelfcon Times representative the other day. Lack of enthusiasm was the main reason that he gave for the two million shortage, coupled with the fact mat as previous stock was selling on the market at 95 per cent, and 96 per cent., it seemed to be too groat a strain to ask people to pay 100 per cent, for the latest loan. Enthusiasm had disap. peared with the close of the war, and many of those who did their duty in regard to loans during the war were now trying to do as little as possible. 'Very few persons had. taken up more •of the present loan than was necessary to comply with their statutory obligations.

A 4% per cent, loan did not attract the small man at all. He wanted 3J per cent or 6 per cent., but for the big man the loan was a splendid thing. It was not a small man's loan, for the taxfree provision made no appeal to the man who paid little or no income tax. Post Office inscribed stock did not appeal to people. They liked to handle their security.

"The Government are very much to blame in not really booming the loan," the speaker added. He contrasted the state of affairs in New Zealand with the methods of loan raising in England, America, Australia and other places. He instanced the use of tanks in London, and other methods of bringing the appeal prominently before the people, The New Zealand Government, hopefully waiting for something to turn up, failed to enlist the assistance of bankers or prominent men to help to boom the loan. Money should have been spent in the appeal. Even a tent, erected in Cathedral Square, would have localised the matter and brought it before citizens. THE BANK DEPOSITS. Discussing the great surplus of money in New Zealand, and particularly the thirty millions of free deposits in tne banks at the end of the September quarter, the financier said that the money was partly represented by the deposits at call of big business houses?, which wanted to buy on the London market, but could not get the goods. This meant that they were gradually accumulating, but had to keep , the money handy. Many persons had been holding nack waiting foif building costs to recede, although he did not think they would. There were difficulties in the way of investing just now, for the Government did not allow any money to leave the country, and in any case people did u</i like to invest in English, Canadian and American or other foreign securities. 11l course of time, however, people who had large sums of money to invest would try to get a better rate of interest, and money would gradually get away. During the last twelve months it 'was noticeaiblc that more Australian stocks were coming into the market Union Bank shares. Bank of New Sduth Wales shares and all sorts of Australian stock were coming on the list, showing that money had started to go out of the country.

As an instance of the general prosperity of the Dominion, it was stated that whereas at the end of the June quarter just before the war, the deposits had exceeded the advances by only £300,000, they had gradually increased until the excess at the end of the June quarter was £10,600,000. The deposits then totalled forty-three millions, of which twenty.eight millions were free deposits. At the end of the September quarter the deposits exceeded the advances by £1<5,223,113, and the free deposits totalled £30,331,318. The excess of deposits over advances was money lying idle.' Big manufacturing and other firms were waiting. They could not purchase the goods they wanted, and they were holding the money m their banking accounts because they could not invest it in New Zealand at short call.