STILL SOUND

Hawke's Bay Herald-Tribune, Issue 162, 27 July 1937, Page 9

STILL SOUND

-Press Assooiation.)

New Zealand Credit In London HOPEFUL TRADE SIGNS

(By Telegraph-

AUCKLAND, Last Night. The state of Australian and New Zealand credit in London, together with matters of policy in central banking, were the subject of comment by Hon. E. G. Casey, Treasurer of the Commonwealth of Australia, who is passing through Auckland by the Monowai on his way home from the Imperial Conference, which he attended as a member of the Australian delegation. Mr. Casey said he was in London .when the sudden crieis developed reigarding the sale of gold. Just preIviously the first announcement of the iproposed profits tax as a national de;fence contribution had exercised a most jdisquietening eiiect in the city and the general financial outlook became very depressed. Then the movements in gold caused increasing alarm with the result that all gilt-edged stock fell in' ; value, while there was a disastrous 'slump in metals. However, the market Ifor primary products suffcred no great setback. 1 ' It was naturally a matter of interest ,to study the xeaction of the markets," jfilr. Casey said. "But, unfortunately, •these difficultics oceurred just at a timo .when the Australian loan conve'rsion operations were in progress in London. The result was that about 50 per cent. was left on the hands of the under* writers, but under the cireuinstances •that was not surprising. In comparison with other couhtries, Australia 's credit in London is still sound and I tjiink the game can be said for New Zealand." Discussing matters of intemai financial policy in Australia, Mr. Casey aaid he had just received the report of the Royal Commissioa on banking and monetary afiairs and had only had time to peruse it hurriedly. "It is a paicstaking report, which will be of interest to New Zealanu as well as to Australia," Mr. Casey continued. "The Commonwealth Bank comes in for some mild degree of critieism arising out of the exercise of it3 funCtions as a central bank in the years of the depressioa. As one who has been in close touch with the bank for a gobd many years, my impression is that the critieism, which is direct, but not harsh, represents wisdom after the event. As Napoleon said, wo would all be first-class generals if we could forecast the result of a batfle. The Commonwealth Bank started its central bank functions during the depression, at a time of great anxiety and unprecedented conditions. The board had to gain its experience on the run as ordinary banking experience was of no avail. Central banking practice has frequently to take a line which is contrary to the instincts and interests of ordinary commercial banking. "A more clear-cut policy of greater boldncss in certain directions on the part of the Commonwealth Bank is easy enough to advise in retrospeet when one knows what has actually taken place. It is a very diffierent thing to be bold when none could see through the mist of the future" and when such boldness might easily have meant disaster." Regarding the future outlook for both Australia and New Zealand, Mr. Casey said the most hopeful sign was the apparent willingness of the United States to take a more liberal view of world trade. The American Government had exprfessed its desire to bring about a greater measu 'o of reciprocity in trade with both the United Kingdom and the countries Of the Empire and the prospects in this directiOn were more encouraging than they had been (for many years.