THE Wairarapa Age MORNING DAILY WEDNESDAY, APRIL 2, 1913. TIGHTNESS OF MONEY.

Wairarapa Age, Volume XXV, Issue 10713, 2 April 1913, Page 4

THE Wairarapa Age MORNING DAILY WEDNESDAY, APRIL 2, 1913. TIGHTNESS OF MONEY.

A good: deal has been written and eaid, wiitliiri awl ■without the Dominion of late concerning the temporary deafness of money. Heads of financial institutions have issued; warnings to Governments and private individuals again&t ■practising' acts of extravagance, and a feeling of more or less alarm has 'been created at the prospect of a period' of hard times, if not acute depression. People are tempted, in times of financial stringency, to form erroneous conclusions. It is as well to point out that, when financial ' institutions issue a warning against extravagance, thoy do «o because there is a keen demand for money. But, when this demand exists, we should endeavour to traoe its cause and discover its effects. Why, for instance, should there tbe a financial .stringency in New Zealand at-the present time? The seasons have been good. The prices for our primary products have been exception - ally high. The output has been well above normal. What,- then,* has, produced the spirited demand for, money that lias created a hardening-in tlhe rates',"of interest? It cannot be that the commtunity is indulging in riotous living. Nor are there evideiws»s-j,arf greater extravaganoe than has been witnessed in years that are past. The fact is that people are mor<e inoHned to derrelop the resources of-the, country than they have been for years- past. A greater sense of,security exists than formerly,,and. farmers "and othersare _ disposed to expend money in improving their securities, both in land and business. When this is so, it follows tlhat the demands -upon the banks for advances are increased. At periods when money is abundiant and interest £s JtoWj it is safe to conclude that trade

is stagnant and til© avenues for investment are restricted. It is tinanxiety oi people to develop their business or . estate, to increase the productivity of tlie soil and the rev emue-creating capacity of the various industries, that creates the increased demand for money. While, therefore, the warning of the bank.s against extravagance is natural at a time of stringency, it is by no means an unhealthy sign to witues., a liard eoiing of ther prices of money. Or; the contrary, it affords convincing proof of the confidence of the people in their country and of a desire to develop and expand. The ultimate effact will be an era of prosperity, in which, everybody will participate. •Cheap money is a good thing if it can be profitably employed. In the generality of cases, .however, the fact that money-is cheap i s evidence that it is not in demand for industrial and other enterprises. There has been i* temporary cessation of public works in the Dominion, but the fact that the whole of the surplus labour ha« been absorbed, and there has been no pronounced evidence of unemployment, goes to show that private capital is being freely utilised. The Government lias succeeded in raising a loan on fairly satisfactory terms, so that there need be no apprehension concerning the public commitments, and the railway and other works will be prosecuted with tlie -same industry as in former years. Viewing the situation, therefore, from the whole of the surroundings, there cannot be the slightest room for alarm on account of the present apparent stringency. Oin the contrary, people of the Dominion may congratulate themselves that there i« a demand for money for exon internal development; and that the confidence of propez*ty holders is being restored, We venture to think that, wllfln tlie results of the operations of the last financial year are disclosed, tliey mil reveal a condition of buoyancy-" ;that is in marked contrast to that which pessimists have anticipated.