STRINGENCY OF MONEY MARKET.

Wairarapa Age, Volume XXXI, Issue 3004, 29 September 1908, Page 5

STRINGENCY OF MONEY MARKET.

WHAT ARE THE CONTRIBUTING ; CAUSES? ' COMMERCIAL AND FINANCIAL VIEWS. Until a few months ago New Zealand was revelling in a wave of prosperity upon which rode buoyantly her agricultural, manufacturing and commercial interests. Money was plentiful and cheap—and the general prosperity rsticulated through a thousand channels.," All this was altered by the wave of depression which received its first momentum in America, and which played havoc with the prices of most of our products. . New Zealand is, in consequence, enduring a period of monetary stringency. The bank returns tell'of straitened circumstances, and of the insistent demands of borrowers. In "the shape of advances and discounts the banks have lent nearly 24 millions, or a million more than they hold in deposits. If this vast sum really represented expenditure in developing the resources of the country, it would he an encouraging sign, but does it? The prices of our great staple, wool, have dropped 50 per cent. Until that recovers some cf its leeway, there can hardly be any marked improvement in the position. Our imports appear to have on an unduly lavish scale and land values, in too many instances, . have been based on their earnings during seasons of abnormal prices. -The process of adjustment is now taking place, and helps the deadlock. The Wellington "Post" has endeavbired to ascertain from prominent banking and commercial men what are the causes of the present monetary stringency and their cure. The head of a large urapery nrm, who declined to have his'nan e published, said:— Undoubtedly there is, and has been for some time past, a depression in trade all lound. I wouldn't like to venture on an analysis of the causes, and much less to say 'when and how will this stringency be removed.' My house has cut down exyttouituru.; other houses are doing tht j ""m' > : »> is tor the Government ; to follow, They must shorten sail with regard to the expenditure of public money, then the depression will not last long." Mr A. H. Miles (Murray, Roberts and Co.) observed that he thought l the causes of the scarcity of meney • "have arisen in a much wider noiu than are a reaction of the upsand downs ofithe European and American money the-'wa\e. , of which we are now beginning tu feel." "I am of opinion/' Mr Miles continued, " that the congested coi - dition of the money market in New ,- Zealand is largely accentuated by the : uncertainties under which the trading communities are workiig. lho 'dilapidated condition of Uo * wool and. hemp markets forms, of course, one. of the vety targible causes of our troubles. With woo*

realising with tiany qualities; of, staple—about One-half of the market nriee of two or three years ago, wn't) growers have now only about one-half: of the money to spend to ; day that tney have had." "The miesing half," Mr Mileß went on, "forms one cos in the wheel which yn<i will ba've to piece together for ycurself, to find the aggregate of causes of the scarcity of money. The wool* sales open on Tuesday in London, and then you will be able to tell whether we are to hßve any immediate relief of the existing tension. About those sales there are, in some quarters, gloomy forebodings. I shall be surprised, so far as I am justified in expressing an opinion, if we do not find the better' classes of _ lightcondition crossbred 'wools maintaining the full level of the last series of ; sales of this class of wool." At present Mr Miles thought the hemp outlook to be by no means \ hopeful. The immediate future, he imagined, would largely depend upon the demand for binder twine north of the equator. The low prices which Manila hemp have been fetching had caused a considerable quantity of that fibre, of the nice, soft qualities, to come more largely into use thai* was the case when Manila figures, were on a higher level. Mr David Nathan (Joseph, Nathan and Co.) expressed himself' appalled'V at the magnitude of'the question. "No man in his sane senses," he. said, "could say how and when the stingency of the money market will be removed. We are trying to solve that problem every day of our lives. as for the causes, they are innumerable. I assign the principle cause to want of confidence on the part of the investor. Tjook at this country, what security is there for money? The fear of an increase of the mortgage tax destroys confidence in mortgages as an outlet for capital. Do you think I could safely advise a friend, if he asked me how he might. invest £IOO,OOO in New Zealand? No; capital has no confidence to-day. As for the banks, I consider they have done yeoman service; but you can see for yourself that if municipalities, not only here, but at Home,, embark so largely in industrial under; , takings they do not leave room for the employment of private capital. • You might say, But why; not employ it in the extension of manufactures? : Very well. What do you find all over the world—in Japan, Turkey, Persia, , India, Russia, America, the United Kingdom: intense labour unrest. Can you answer that question; can ; you say that the unsettled state of the labour market inspires confidence in people with money? If you can* I will answer your question." Labour " continued Mr Nathan, "gives you less value for your money to-day than it ever did. I am connected with an undertaking that is paying £3,000 a year more in wages than it did, and ii getting less value for its additional expenditure than it ever did. 'People who have money to dispo.se of shrink from investing it 'where there is so much uncertainty about its return."