Wairarapa Daily Times. [Established 1874.] SATURDAY, FEBRUARY 9, 1895. THE MONEY MARKET.

Wairarapa Daily Times, Volume XVI, Issue 4947, 9 February 1895, Page 2

Wairarapa Daily Times. [Established 1874.] SATURDAY, FEBRUARY 9, 1895. THE MONEY MARKET.

Tub .genial member for Jlastcrton, in Lis recent address to the doctors, 3 implied that the action of the Government of New Zealand in setting up a farm mortgage business, bail mado an impression upon the Scotch bankers, who had, as a consequence,! reduced the ra-tc of interest on deposits, to one per cent. The absurdity of this utterance was neither apparent to the speaker nor his audience. Ever since the commercial crisis of 1893, gold lias been flowing.into England at an extraordinary rate, the Bank of England reserve assuming abnormal proportions, with no apparent outlet for the metal. All the better class of Government stocks wore eagerly rushed, and Colonial Government stocks, which in 1893 were in the * eighties, rapidly rose to the century, and record prices were mado. Fine trade bills were discounted in tho o'pen market at 12s 6d per cent, per , airman. Tho inability of the Scotch ban'ks to find a profitable use for money, compolled them to reduce thoir deposit rates as low as possible, -with a view of curtailing deposits, Jind in doing so, tho Scotchmen we»"e wisely conserving their own interests, and not imitating the ' stupid financial methods of the Ifew Zealand Government, Money has been-extremely cheap in England, and even in. the Colonies the accumulations in the various banksi we mean the sound institutions—aro abnormal. The Colonial institutions, like tho Scotch bank, have been obliged to discourage depositors, and •|tbe rates for deposit money jn New

Zealand, have never been lower, There ib a plethora of money in the Colonies, and the Home Country loan agents and money brokers are doing a thriving business in good securities.

Money has been cheap for several ' months past, but will it remain so, ' much longer? A hardening tendency is already apparent, for the open market rate for three months' bills stands, according to a London cable dated 3rd insfc., at 17s 6d to £1 per cent,, a forcible advance on the rate quoted on the Ist February, when 12s Gd per cent, was the ruling figure. A stiffening o[ the money market is confidently expected by financial authorities at Home. It is contended that the numerous applications, on account of foreign loans, will absorb all the idle money in London. The United States is the only disturbing element in the the prospect. The currency question in America is a serious obstacle, the fatuity of endeavouring to give to silver a value that it does not possess iii order to placate thu silver producing Stales is having a disastrous effect on trade and commerce, Gold is being drained out of the country, and tho State Treasury, which should contain a minimum of 100,000,000 gold dollars,has reached a dangerously low level, and a resort . to a loan to replenish is inevitable. This expedient was tried twice last year, when upon each occasion bonds to the extent of fifty million dollars were issued. Unless the currency question is taken in hand and settled

another commercial crisis in America' is almost sure to occur, It is the j fear of this happening that it is to a very great extent impeding American revival, The Yankees themselves, however, seo the danger ahead, and they may be relied upon to take the j necessary steps to avert a collapse,

Tho cessation of hostilities between China and Japan is an event likely to have a benefical effect on the money market. Japan is sure to insist upon an indemnity, and the amount is variously stated at from twenty millions to fifty millions sterling, It is also alleged that .lapan, with her craw for Western ideas and forms, will ask for such an indemnity as will enable her to institute a gold currency within her borders. China must perforce seek the assistance of the money lenders to satisfy Japan's demands, and whether the loan is a gold or a silver one its effect must bo to harden

money. The indications are nnmistakeably in favor of a stiffening movement in money, of which tho hardening of London discount rates is the first sign. Cheap money, as was the case all through last year, is by no means a blessing, for never was trade so dull and commercial depression so severe. A tightening money market is therefore welcome if by that means trade revives and stagnation and depression arc whittled away.