MONEY MARKET.

Wairarapa Daily Times, Volume XV, Issue 4797, 11 August 1894, Page 3

MONEY MARKET.

[From the 2i,Z. Trade He m]

Though a tendency to cheap money is very evident, we cannot yet report much actual change. In Melbourne the Banks havo reduced deposit rates to 3J per cent, for 12 months and 2 per cent, for 6 months, and we hear that not only are the other centres likely to follow suit, but tlmt indications point to a further reduction to 3 per cent. Hero the three New Zealand Banks are still giving 5 per cent,, and the three Australasian Banks <ll per cent,; but we should not be surprised any day to see the latter reduce their terms to '1 per cent., and we suppose the New Zealand institutions will scarcely continue to maintain a 5 percentrate much longer, Building Companies are a little bit easier, anil in some cases are reducing their deposit rate to 5, while others still give 5| per cent, Any further reduction in Bank rates would, no doubt, be followed by a a general adoption of a lower rate "by Buildiyg-Companies. The supply of better, but lenders are still «ory 'particular as to character and margin of security. I

The Colonial Treasurer lias made cheap money an important feature in his Budget proposals, which include a loan of £1,500,000, to he raised in the London market at 3J-, ' for the purpose of being lent out to settlers at 5 per cent, on security of their freeholds, and £500,000 to he raised in tho Colony at 4 percent, to provide a safe investment, described as" Colonial Consols," for the savings of colonists. There is a further : proposal for deposits from foreign InsuraneeCompanies trading in NonZealand, which it is estimated would amount on the Companies now workvh4re to about £840,000. This is to] be iii the shape of nppoved Colonial securities, and is intended as a safeguard for colonists doing business ' with these companies. Wo heartily approve of the object in view—Cheap Money for the Colony; but wo must confess to some misgivings as to the borrowing and lending proposals of tho Treasurer, The matter is still under discussion in tho House, and may bo modified, before it is finally dealt with. l'he' handling of £1,500,000 of borrowed money to lend ont to tho .Bottlers will need to bo very carefully safeguarded, to protect tho Colony from loss both as regards tho principle and interest. Tho Treasurer may regard tho extremo carefulness that characterises lenders today as a. "whim.of the capitalists," but wo aro satisfied that the adop-, thin of a general two-thirds basis

for advances would bo vory unsafe, The scheme for Colonial Consols Ims certain merits, but t-lioro are danger s attending it, also, Apart from that question, howover, it is protty; clear that a 4 per cent, rate of intoreston these funds would liavo a tendency to mako monoy dear rather than cheap, as it must have a tendoncy to keep up tho rates for bank deposits, and thus of necessity keop up tlio banks' lending rates. Wo trust the wholo proposal will bo most carefully threshed out before it is sanctioned by tlio-Legislature.