LONDON AND FINANCE

Hokitika Guardian, 1 November 1920, Page 4

LONDON AND FINANCE

(Mencantile Gazolltlc } October 27th.) Cables came yesterday from London buyers to their customers in Now Zealand, informing them that th 0 hanks refused to buy their hills unless same were supported by letters of credit. It has been the practice ever since the earliest days for banks to purchase drafts drawn by buying houses, supported by hills of lading and the endorsement of the drawer. The usual practice is for the buyer when .lie lias filled his customers’ requirements, to get the gooejs shipped, attach the hills of lading and insurance policies to the manufacturer’s invoice, to draw a hill oil his foreign customer at sight, 30 or 60 days, as the case may be, for tlie cost of the goods, freight, insurance with his own commission added, and take the hill to the bank. This has always been deemed first class banking business, and drafts have readily been purchased at face value loss current rates of exchange. The resolve of the hanks to refuse this business indicates the strain at present existing upon banking resources in (England, that exports are lagging behind, and that the destructive policy of the trade unions in raising cost of manufacture is producing such a tension that the breaking point is not far off. In the meantime, as the hanks are restricting Eastern credits as much as possible merchants bore will find it difficult to renew stocks unless the position eases and of that there is not much hope while tho workmen continue to force up prices.