WELCOMED.

Auckland Star, Volume LX, Issue 229, 27 September 1929, Page 7

WELCOMED.

Uncertainty Of Past Few Weeks Cleared Up. HEAVY GOLD EXPORT. (Britisli Official Wireless.) (Received 12 noon.) RUGBY, September 26. The increase in the bank rate by 1 per cent to 61 per cent was announced to-day after the usual weekly meeting of the court of directors of the Bank oi "England. The discount rate had remained at 51 per cent since February 7, this year, when it was raised to that figure from 41 per cent. The last occasion on which a 6J per cent bank rate prevailed was in April, 1921. It is attributed to the continued efflux of gold. Yesterday a further large amount of approximately £1,000,000 was withdrawn from the Bank of England, partly for shipment to America and partly for export to the Continent, bringing the total for the week up to nearly £3,500,000, and reducing the total stock of gold in the bank to £133,000,000. Withdrawals of gold have been exceptionally large during the year,, but the anticipated rise in the discount rate will check this tendency. On the whole the city of London has welcomed the rise in the bank It has definitely cleared up the uncertainty of the past few weeks, which has had a more clogging effect on- stock markets than dear money is likely to have. There was a general marking down of prices on the Stock Exchange after the rise was announced, feut there was no pronounced selling. The exchange position has been quick to respond to the higher bank rate. The £1 sterling, as expressed in American dollars, has risen, as also have both French and German. On February 7 last the Bank of England took action to arrest the dram of gold which, in five months, had reduced the bank's holding from the high record of £176,500,000 to slightly below the minimum of £150,000,000 recommended by the Cunliffe Committee, and raised the bank rate from 4% per cent to 5 per cent. A substantial recovery was the result, but since then there has been a continuous depletion, the losses running into millions in some weeks. The total loss up to last week's returns was £27,290,000, the stock of gold then being £136,921,000. The bank rate was at 7 per cent for twelve months in 1920, being reduced to per cent in the following years, and finally by alterations at short intervals to 3 per cent in July, 1922. Since then the rate has again risen, the culminating point being the 6% per cent just announced.