SHOCK TO THE MARKET!

Evening Post, Volume CXXVI, Issue 138, 8 December 1938, Page 10

SHOCK TO THE MARKET!

OPINIONS OF FINANCIAL' PAPERS

A POSSIBLE DANGER

LONDON, December 7.

The "Financial Times" says that tha New Zealand currency measures gave a fresh shock to the London market in Dominion stocks. The surprise was all the greater because the New Zealand Minister of Finance, Mr. Nash, last October denied reports that restrictions were imminent.

Quotations were not greatly affected on 'Change, but jobbers widened prices as a precaution against ppssible selling. Some observers are of ths opinion that the measures are definitely favourable to stocks, since sterling will now be conserved for loan purposes.

The "Financial News," in an editorial under the heading, "Financial Savagery," says nobody denies that the Government has carried out much useful and constructive social work. The trouble is that it has persistently refused to cut its coat according to the cloth. After remarking that the restrictions are probably the best device at hand. and that the service of the external debt can now be considered fairly secure, the editorial adds that the danger is that the Savage Government may now consider itself free to pursue to unsound financial policy without fear of the consequences.

Dealings in exchange with New Zea» land today were on a very restricted scale and no public rates were quoted. These conditions are not expected to last long, however.

The banks today were waiting for the position to clarify, and when fuller information arrives it is anticipated that business will proceed on a scale different from that which has prevailed recently. ACTION JUST IN TIME. The "Daily Telegraph" (Conservative) says that the New Zealand Government acted not a moment too soon in order to increase its London balances. The steps taken, if wisely applied and if they achieve their purpose, should reassure bondholders. However much exporting countries regret the curtailment of exports, it is for New Zealand to adopt the measures best calculated to improve her trade balance and maintain the high credit which she has enjoyed for years. The "News Chronicle" (Liberal) says that the question arises whether •Jibe measures will remedy the fundamental factors causing a- severe deterioration of reserves.: The social and other legislation might yet necessitate a further depreciation of the New Zealand pound.

The New Zealand High Commissioner in London, Mr. W. J. Jordan, issued a statement defending the action on the ground of necessity, stating that it was equally in the interest of exporters that New Zealand's position should be properly controlled.