COMMERCIAL.

Press, Volume LXI, Issue 18406, 12 June 1925, Page 10

COMMERCIAL.

•. .A.v. ♦— BRITISH INDUSTRY. AND THE EMBARGO ON FOREIGN LOANS. (SPECIAL TO "THE PRESS.") (By Hartley Withers.) . That lending abroad tends to stimulate exports, from the lending country, of goods and services, is a commonplace that need not be argued: Apart from shipments of the precious metals, there is no other way in which the borrower can take advantage of tnb credit so created except by buying something that is provided by the industry—using the word .in its widest sense —of the lending country. It need not do so directly. For example, if a South American "State that is building a railway raises a loan in London, it may spend the proceeds on steel rails made in Belgium and ? n lolling stock manufactured in the United States; but the Belgian and American sellers of the goods in question will take payment in sterling th-afts, becauso a sterling credit is all that the borrowing Government lias got for making payment for them; and either they, or someone else to whom they may pass the credit on, must ,buy something in England, for England, is the country, and- the only country, where the particular kind of money that has been borrowed, passes curre'fiE in for goods and services; if it is going to be spent at' all—-as it certainly is—it has to be spent here finally/however often it may have in the meantime changed hands abroad' and been converted into foreign currencies. . "In actual practice," says Mr Hobfion, in his work on the "Export of Capital," "all countries which export capital send abroad , a more or : less ■\ride range of commodities," and ifr is a fact that has often been demonstrated from trade statistics that the years in which our foreign investment has been on the. greatest scale have been marked, or followed by the greatest activity in our exports of goods. /On these grounds there seems to be 'llO doubt that the- embargo -on foreign lending, which has been-, part of the process of raising the value of sterling to something like its pre-war. value, as measured by foreign rates, of exchange, has had the effect of diminishing • the demand for British; goods abroad, and so has assisted the depression that has ibeen prevalent in our great exporting industries." And at first sight, if. the

considerations put. forward above are "correet, there seems to have been little Treason for it.. If. it be truo that foreign lending necessarily means an export of. British goods, then'the export of ■ goods, "must cancel the 'credit created I>y the 'loan, and there is no offer of sterling to •turn the exchanges against London and , .endanger-the restoration of the gold .standard. .But, as was, shown above, ;the purchase of British goods, which follows the foreign investment, need (not be direct or immediate; and until ;it takes place there is'a sterling credit on offerT In" the long run, foreign lending is implemented; •by exports; the ;.. lender creates a claim''on England and English seller of the goods meets ist with a .claim on the; foreign buyer .of ' 'tho commodities';sold; but it may take v many months before the operation is completed; and. protection of -''Bterling,-v which the : embargo was intended to effect, was presumably meant to."steady.' its value during tho critical time through which it has lately passed. Those who imposed the embargo could not act on principles based on what is ~ pbiiig to happen in the long.run; but on the exigencies of the present moment. ■>■;; Nevertheless, one may be permitted • loodoubt whether" th'e- , object desired could, not have been; secured -by some ■ less drastic and by one which couldliot have had the effect of checking' British exports and increasing her ' tradjo '.'s I£ been de.creed'by the "authorities; that all money x'lontvto foreigners, during the present .critical' period,' must be spent on. the of British goods; and must bo t held ,by the issuing house responsible . :fdr ; vtho loan-until .transferred to ; tho .' •; sellers ex.changes ■: would; not have been ianbl the;: British; would- not" hayo; been ' It isj: indeed, ■ ■ often; contended that : -;, some such \;proviso should always be ;-:imadewith regard to loans —or at'least ;'■■} with regard to part of them—that 'are* 'at any: timeraised in this country,. as ; doria in- other'countries; that lend v abroad. ] It seems to' me that. in : or div iiary'timesthis:'restricti<ih is nnnecea- '• and businessi'V^Mr: Vickers : lately ; put it foroard "at; the .annual meeting of Vickers,' Ltd., .as,an assists ''■ ahce to. British' trwe.;- But, Bin .-:;,: the long run,: foreign lending 'means : since our freedom ; from suchresti-ictions has in the past •■ secured^iisva '\ good deal of .profitable W lendihgUbnsinessy < the: balance of .adr ' in., times when we can, afford j to wait, seems >to .be strongly on the '; side of especially .','■': of:vthose■ a ; prejudice*' in V favouir of freedoipi'for'its own sake.,:-. i ft-,: %ißut ': a'tyytke pre^nt^^oiment, : when, .every stone, that can be turned to help bur depressed; import industries and to ,' relieve ;the? burden of our' unemployment is. well< worth < turning, thero; is -much to-I>e: said for the encouragement ; of-foreign lending, with, the condition already, suggested? By attaching this condition, we : should prevent any offers •of .sterling abroad in; consequence of ;^ ; '';lbM'^opArationß•,■'■'■an'd'■:w'e^;sh6uld-'at : ■the" same' time' secure that potential foreign .buyersof our goods, 'whose, • pockets 'were empty,, hut whose credit' ;: was 'gopdj ; could be supplied.-.by our investors-with- means of payment. - objected ; thati such:-:'a re; strict\6hjwonld he ah interference: wilS "the our money market. So it would;;and'therefore to he regretted as ah unfortunate necessity.ipnly justi;fied by, the- fact that the times are out i of v is not nearly such a drastic its freedom .as vthOr present <e?nbargo. And if the ; restoratioriiofHneV'gbld standanj neces-. sitates".•'protective,, measures for its rhairitehanceii5 V thei : ,mikl3ir restriction suggestedlis surely i, preferable to the i indefinite continuance of the embargo.

STUDHOLME JUNCTION SALE. There was. a very short yarding an Wednesday and bidding was- slack. The following-prices were realised:— v Fat Lambs—s6 at 30s 6d, 19 at 28s, 42 at 295; 29 at 25s 6d/15 at 30s fid, 23 at 30s, 66 at,34s, 39 at 305,6 d, 36.at.295, 73 at 34s ldj 73 at 34s Id, 56 at 30s, and 26 at 30s. - ( ' | . HAWARDEN-MARKET; , For" the last fat lamb salo of the. season at Bawwden yesterday, 765 were yarded. Prices held' good at the present echeduM rates fit, lia.por lb for iint quality and l»id to-lOid for seconds. For E. W. Johnson, 131 were sold at 80s, T.' Coatello, 74.at 81s 8d; B. D. Doak, 16 at 3fia 6d; James Doak, 9 nt 25s 8d; E. J. Dwyer,,ia it 245; W. Neeve, 91 at 28s 4d W.-E. Booker, 32 at 80s; ST. L.'Boon, 27 at 80s lid; E. WriehJ, 20 at 26s lOd; «fl Mrs E. Booker, 6 at 27e 6d. A pen of 22 ewes mad© 21s. A few he»d of cattle and * '. null entry of pige *°ld at wEng values.