CONTROL OF EXCHANGE

Evening Star, Issue 22465, 9 October 1936, Page 7

CONTROL OF EXCHANGE

TRADING BANKS' FEARS NEED FOR LONDON FUNDS ESSENTIAL TO BUSINESS The fact that the new powers of the Reserve Bank of New Zealand, combined with an extension ot State marketing, would tend to concentrate foreign exchange emanating from New Zealand’s exports in the hands of the Reserve Bank embodies a principle that has found critics in many financial quarters. Recently the ‘ Economist ’ pointed out dangers in the combination of central and commercial banking under one roof, while last week the principle was strongly condemned before the Commonwealth Banking Commission, Discussing before the commission the suggestion that the Commonwealth Bank should aim at complete control of exchange by taking over Loudon funds of the trading banks, Mr C. Darvall, general manager of the Commercial Banking Company of Sydney, Ltd., said the proposal was unsound. Such extreme power would act as an impediment to business and trade generally, and would lead ultimately to control of imports and exports and the growth of an official exchange market.

“ The results of the numerous national controls of exchange, which have nearly throttled world trade, together with their irritating formalities and restrictions, are sufficient warning,” said Mr Darvall. “If the Commonwealth Bank assumed control of oversea funds we should suffer loss of income for which we might not be able to recoup ourselves, to the disadvantage of both our customers and shareholders. We should also suffer loss in exchange. “ Our London funds are vital to our business. They materially add to our strength and inspire the confidence of our depositors and of other banks, assist us in meeting our customers’ requirements, and afford a source of revenue while remaining very liquid, which enables us to make lower charges for our services in Australia. Deprived of control of oversea funds, our standing will be impaired in the estimate of oversea banks. The incentive to build up reserves overseas to meet adversity as we did to meet the last depression will be lacking. We will be severely handicapped in meeting competition of banks domiciled outside Australia, and loss of either liquidity or profits must be expected.” TRUSTEE INVESTMENTS A legal opinion as to the effect of the Trustee Amendment Act passed last year has been obtained by the New Zealand Stock Exchange Association. The opinion is to the effect that where trustees have the power to invest in certain specified classes of securities they may purchase New Zealand Government securities at any price they think fit, but in the case of other securities they may not pay more than 15 per cent, above par or redemption value, and if the securities are redeemable within 15 years, then trustees may not pay more than redemption value. A trustee may retain, until redemption, any security already purchased pursuant to the main Act. MILK PRODUCTS CHEAP IN JAPAN POOR CHANCE FOR IMPORTS A few months ago considerable publicity was given to an isolated shipment of butter from Japan to the British market, and an opinion was expressed that New Zealand had no occasion to fear any competition from Japan in butter; but that it was likely that more attention would be paid to condensed milk, for which there is a huge demand in the East. , Information recently received by an Auckland firm of exporters from their Singapore associates indicates that Japanese condensed milk is selling there at about half the price at which it is possible to supply the New Zealand product. There is not the same margin between'the respective prices of unsweetened milk, but even so, the advantage is with the Japanese. Cheap sugar, labour, packages, and transport costs, and a lower return to the Japanese dairy farmer account for the low price at which milk is offered. LONDON STOCK MARKETS (British Official Wireless.) Press Association—By Telegraph—Copyright RUGBY, October 7. The stock markets were very active, particularly home industrials, which were stimulated by Mr Neville Chamberlain’s speech. Leading internationals and good British funds were not affected, and continue steady. SYDNEY WOOL SALES Press Association—By Telegraph—Copyright SYDNEY, October 8. At the wool sales 10,944 bales were offered and 9,574 sold, while 1,472 were disposed of privately. There was keen all round competition, and the best wools were cleared in sellers’ favour. All other descriptions were firm. Yorkshire and France were outstanding buyers, with good support from Germany and the United States. Greasy merino made to 20Jd.

AUSTRALIAN STOCK EXCHANGES Press Association—By Telegraph—Copyright SYDNEY, October 8. On the Stock Exchange industrials were steady to firm, with a moderate turnover. Barrier shares strengthened and Zinc Corporation touched a new high level. MORNING SALES.

Loloma 13 6 Irowat ... 0 13 General Motors 13 6 Hume Pipe 0 19 0 Upper Watut ■ 0 2 1J Sulphide Corporation 0 16 7 FRENCH BANK RATE Press Association—By Telegraph—Copyright PARIS, October B. (Received October 9, at 10.5 a.m.) The bank rate has been fixed at 2J per cent. THE SEARCH FOR GOLD ARGO DREDGING COMPANY ‘ J A dividend (No. 5) of one penny per share, free of income tax, has been declared on all the shares in the Argo Gold Dredging Company Ltd., and will _be payable on October 23. This dividend represents a distribution of £2,000 to the shareholders, and the sum of £2OO has been placed to general reserve. Transfer books will be closed from October 19 to October 23 (both days inclusive). CANADIAN PRODUCTION Gold production in Canada during June set up a new high monthly record of 316,670 ounces, accounting for 11.4 per cent, of the entire world output during that month. This compares with 308,942 ounces in May and 286,093 ounces in June, 1935. Canadian production for the first six months of the current year totalled 1,767,509 ounces—a gain of 16.3 per cent, over the corresponding period of a year ago. The average price of gold, in Canadian funds, during June was about £8 15s 6d an ounce, which gave the month’s output a value of about £2,777,987. Gold mining is the outstanding feature of Canada’s mineral industry, and the Dominion ranks third among the gold-producing countries of the world. AUSTRALIAN PRICE The price for gold lodged at the Melbourne Mint was fixed by the Commonwealth Bank on September 30 at £8 15s Id per fine ounce, which is 4s 4d higher than the previous price. The increase follows the variation in the sterling-dollar exchange rate. SUMMARISED RETURNS Gold dredging, sluicing, and mining returns as received this week were as follows: Hours. Oz dwt. Addison’s Flat (30 shifts) ,16 10 Argo Ciold ISO 81 0 tiundi 162 58 U Worksop Extended 130 23 0 Maori Gully 130 13 2 Golden Sands (2d shifts) 32 5 Lawson s Hat (two weeks) 52 11 King Solomon (eight days) 30 0 Stalford *j2 ‘J Moonlight 300 111 10 Neniona 158 20 3 Ukarito 132 17 7 Wmahu_ (27 shifts) 52 6 Mossy Creek (corrected return) 71 0 MATAKI DREDGE DIVIDEND .Mataki Gold Dredging Ltd., lias advised the Stock Exchange Association that a dividend of one penny per share would be paid on October 14. Transfer books would be closed from October 10 to 14 inclusive.

FOREIGN EXCHANGES ON NEW ZEALAND CURRENCY BASIS The Bank of New South Wales, Dunedin, quoted the following rates for purchase and sales of foreign exchange (all rales subject to alteration without notice) :

DOLLAR RATES. The Associated Banks (other than the Bank of New South Wales) quoted the following dollar rates to-day on a New Zealand currency basis. They are subject to alterations without notice:— U.S.A. Canada. (Per £1 N.Z.) (Per £1 N.Z.) SELLINGT.T. (del) 3.92* 3.921 O.D. (do!) 3.93 3.92| BUYING— T.T. (dol) 3.96* 3.95| O.T>. (dol) 3.97* 3.961 CANADIAN WHEAT A LOW CARRY-OVER The Bank of Montreal reports that the annual estimate of the wheat carryover in Canada at July 31, the end of the crop year, was 108,747.059 bushels, a decline of 94,525,957 bushels as compared with last year and the lowest figure since 1929. The net world imports of wheat for the ci op year have amounted to about 500,000,000 bushels. To this Canada contributed 250,000,000 bushels, or about 84,000,000 bushels more than in the preceding year. Of this, about 30.000. bushels more went to the United Kingdom, 24,000,000 bushels more to the United States, and 30.000. bushels more to continental Europe. WHEAT PRICES WEST AUSTRALIAN RECORD Conditions in the overseas markets are encouraging to Australian wheat growers. Sales of 629,000 bushels of Australian wheat in London were recently reported, including new crop wheat for January-February shipment, which is the first sale of new wheat of the coining crop. The record price of 40s a quarter has been paid in London for this season, a cargo of West Australian wheat changing hands at this price for October shipment. Sales of Australian wheat in London in September amounted to about 2,401,000 bushels.

£ s. d. Commonwealth Bonds— 3J per cent., 1942 101 12 6 3J per cent., 1949 ... 98 13 9 Bank of New South Wales 33 12 6 Tooheys 1 11 9 Anthony Hordern 0 18 6 Associated News 1 3 10) Dunlop Perdriau 0 17 3 Electrolytic Zinc (pref.) ... 2 6 9 General Industries 0 19 0 Goldshrough, Mort 1 14 0 Howard Smith 0 18 U Millaquin Sugar 2 2 9 AFTERNOON SALES. Bank of New South Wales 33 12 6 Commercial Banking of Sydney 19 18 0 Associated News 1 4 0 Howard Smith 0 18 U Huddart, Parker 1 16 6 Burns Philp South Sea ... 1 7 6 British Tobacco 2 4 3 Tooheys 1 11 9 Australian Glass 4 14 9 • Goldshrough, Mort 1 14 0 Wilcox, Mofflin 0 10 9 Standard Cement 0 15 3 Commonwealth Wool 0 17 3 Beard Watson 0 17 3 Kandos 1 1 3 Gordon and Gotch 2 11 0 Edwards Dunlop 2 4 6 Mauri Brothers 3 6 6 Mount Lyell 1 10 3 Broken Hill Proprietary ... 3 18 6 South Broken Hill 6 4 6 North Broken Hill 9 16 0 Zinc Corporation 4 13 6 Placer Deevlopment 4 18 0 MELBOURNE, October 8. The market was generally steady. Gold continues irregular. £ s. d. Commercial Bank of Australia 0 18 8 Union Bank 9 11 0 Howard Smith 0 18 3 Carlton Brewery 3 3 0 G. J. Coles 3 18 4 Australian Iron and Steel (pref-) 1 6 0 Australian Glass 4 15 0 Electrolytic Zinc ... 2 4 6 Electrolytic Zinc (pref.) ... 2 7 0 G. J. Coles (rights) 1 15 6 Mount Morgan ... 0 14 11 Mount Lyell 1 10 3 Broken Hill Proprietary ... 3 18 3 North Broken Hill 9 15 0 South Broken Hill 6 4 0 Zinc Corporation 4 13 0 Emperor 0 15 5

London— £100 stg. N.Z Buying. Selling. T.T. £124 £124 10/ O.D. £123 10/ £124 8/9 Australia— £A to £100. N.Z T.T. £101 £100 10/ Fiji— £P to £100 N.Z .. T.T. £90 7/6 £89 New York— Dollars to £1 N.Z .. T.T. 3.96 3.92i O.D. 3.974 3.924 Montreal— Dollars to £1 N.Z. .. T.T. 3.95J 3.924 O.D. 3.97 3.92| Austria— Schillings to £1 N.Z ... T.T. 20.77 O.D. — 20.79 Belgium— Belgas to £1 N.Z .. T.T. . t 23.224 O.D. 23.235 Czechoslovakia— Crowns to £1 N.Z .. T.T. 105.12 O.D. — 105.17 Denmark— Kroner to £1 N.Z-. ... ... ... T.T 18.203 17.893 O.D. 18.263 17.903 France— Francs to'£l N.Z .. T.T. 83.97 O.D. — 84.01 Germany— Reichmarks to N.Z £1 .. T.T. 9.705 O.D. — 9.710 Holland— Florins to £1 N.Z . T.T. 7.340 O.D. — 7.344 Italy— Lire to £1 N.Z .. T.T. 74.49 O.D. — 74.54 Java— Florins to £1 N.Z . T.T. 7.316 O.D. — 7.320 Norway— Kroner to £1 N.Z ... T.T. 16.181 15.891 O.D. 16.241 15.901 Sweden— Kroner to £1 N.Z ... T.T. 15.785 15.490 O.D. 15.845 15.500 Switzerland — Francs to £1 N.Z . T.T. 16.992 O.D. — 16.997 Noumea— Francs to £1 N.Z. ... . . T.T. 82.60 O.D, — 82.66 Papeete— Francs to £1 N.Z . T.T. 82.75 O.D. .— 82.81 Hongkong— N.Z. pence to 1 dollar T.T. 18 5-16 16 13-16 O.D, 18 9-32 16 51-64 India and Ceylon N.Z. pence to 1 rupee ... . . T.T. 22| 22 21-32 O.D. 22 11-32 22 41-64 J apan— N.Z. pence to 1 yen T.T. 17 33-64 O.D. — 174 Shanghai— N.Z. pence to 1 dollar T.T. 17 47-64 16 15-64 O.D. 17 45-64 18 7-32 Singapore— N.Z. pence to 1 dollar ... . . T.T. 34 23-32 35 13-64 O.D. 34| 35 3-16