The Timaru Herald. MONDAY, MAY 18, 1925. THE MONEY MARKET.

Timaru Herald, Volume XCVIII, 18 May 1925, Page 8

The Timaru Herald. MONDAY, MAY 18, 1925. THE MONEY MARKET.

Ait’auag'U \ ui‘y lrulu lnloruiutioa <xx\xxx..xi* L’xxO uauaOo Ui. Lilvj' j.k»x. txu-l iu.UlU.ii Or laiO x>Ur/. /iUi- | iuilU i.OtUl UUS UOiiU giVtixi, it id i oxtvu' utau uni icatux-1 u.iiuu tji. luu yunT sianuuru auu i flit raiuiuy tx uib EuiKion JDuuii xvaio to u pur coat, nave put au j oiiu, ior too pi one lit at Rmst', to I uiu pvj.'xoa ox ciicap niu-uey. 'ixivliox-io New ZetUauu.'s croon, nas stood lugli m London aud m variably toons nave bcuU oversubscribed. Tiie Bank ot England amis ioreod, however, by tue ulilted fc>tales federal 'Deserve jjanK to raise the Eondon Dank Xiate to 5 per cent, to counteract cue intiuence ol tile ’rising discount rate in tne United ;p tales.. VVlien tlie London 'Dank Date was raised to o per cent, strong' protests were voiced by commtyclai and industrial interests'. Wits it possible then to boirow at 4£ per cent. '? Unquestionably Hied o is a connection betaveen dear I money and trade and industrial I stagnation Winch. produce uniiin- j pioyment. prom tiie time of tliej reduction of the Dank Date to 1 4S per cent, in February, DJ2z, I’ignt to June of lust year there was a consistently falling unemployment percentage in tne (Jid uodntry, it arcs ox Miscount (vital to trade and industry) were stiffened in June and July of last year, and ever since Dll lain iiffS nad a rising unemployment percentage. Financial writers .in Eondon insist tliat it is fairly easy to suoav lioav dedr money • adus to unemployment. Put urioiiy, they claim: (l; Unit trade aud industry are nor working on such narrow margins ' ot in-pnt tuat, in existing circutn i stances, it sometimes pays better to j ■ reject orders rather than incur ' extra charges lor financial services; (2) That our dear money maxes business men unwilling to give to foreign customers the credit which is necessary to obtaining the business ; (3) That initiative in industry is discouraged by the tact that a man may do as Well by simply investing his mohey as lie cun do by wearing out his energies in employing it anu supervising production; i (4) That foreign competition is l helping to beat us; i (5) That foreign orders, are kept out of our industrial reach. 1 Moreover us far as New Zealand is concerned it iviii be' ieauily understood that the Lev eminent will not he m a positron to mam- ‘ uun tliei present, low rates of interest on loans granted by the riuite Advances Department if j the .price'of money ■ hardens in ! Eonuon as tiie result pi the nnaneral movements m hanking ■ circles ill England and . the i united States. That will be‘tile first effect, i'eit here of the res.toly ation of the gold standard and the decision ox the Bank of England to resort to the, protective measure of advancing the bank rate, to £> per cent, in the hope of retaining floating' balances in Eondon. : Nevertheless, the strongest exception ’is taken to. this rather risky policy. Deflation iq itself was good, properly applied and given time to work itself out inoppressively, wellinformed : commentators admit. It was over haste which made it injurious. fc>o in the case of the, gold standard the.object is good, out the policy of haste is dangerous. Critics of the decision to restore the gold standard point put that exactly two years ago Dritain arranged a settlement of her American debt, and the United States promptly followed that by ah intensification of iter tariff laws to keep out British goods. This tended to make sjupments of gold Britain’s olily available way of paying the debt. But last year the gold began, to worry America. She was getting choked with, the proceeds of her exactions. The city editor of ail influential London journal thus describes what followed: “British monetary authorities hastened to the rescue. They put a ban on foreign loans here and drove them and the trade orders attached to- them to New York, and at once started to pull sterling up towards parity by, among other things, artificially stiffening- the money market rates. Every help they could give the United States in getting some of I her troublesome, hoard of gold J back into international circulation was given. The taxpayer has already felt part of the burden this dear money policy throws on the nation.' In the national accounts published early in April the item of interest, etc., under national debt services was £7,ltil,(Joo above the Chancellor’s estimate.” As Sir ITancis Bell suggests New Zealand may be regarded as lucky to get, in early Avith the loan; nevertheless it is rather disquieting- in A-iew of the uncertain political situation in New Zealand that the loan issue should result, in partial , failure, and that, the over-basic ; of the political anti financial authorities in London at the promptings of the dollar wor- ( shipping Americans, should bid ■ fair to inflict punishment, on 1 Colonial borrowers who are forced 1 very largely on account of heavy ( Avar loan obligations maturing', , to approach the London money market for their loan requirements. 1