The Guardian (And Evening Star, with which is incorporated the West Coast Times.) THURSDAY, SEPT. 13th, 1923. FINANCIAL.

Hokitika Guardian, 13 September 1923, Page 2

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) THURSDAY, SEPT. 13th, 1923. FINANCIAL.

'IhlE financial operations of the London money market are of interest to New Zealand, because there is tho source of our chief financial credit, and the point where wo turn is a Dominion for loan moneys. Now that Mr Massey is speeding Home and is almost sure to bo negotiating a loan during his sojourn in London, it is of interest to study a late financial review pf the Home money market

founded on the suggestion to remove the restrictions on the use of gold for credit purposes. According to a financial journal some attention has been given of late to the question of the restoration of a lroo nuuket for gold in London. This step has been urged on several occasions, and it was strongly recommended by the CtlnlifTe Committee on Currency and Foreign Exchanges. It is suggested that the matter should be closely considered) now that Britain has successfully funded its debt to the United States, and pnid the first instalment under that scheme with a minimum of disturbance to the American, exchange, while the I nited States, despite the l’ordney Tariff, is apparently importing goods in excess of her exports, aud American prices, broadly speaking, are on a level with those ruling in England. It is not quite clear what advantages from the reintroduotion of the gold standard are claimed by its advocates. In America the experience seems to bo that the possession by that country of half the world’s stock of gold (instead of only one quarter, as in pre-war days) maces it difficult for the banks there to regulate the business of financing trade and speculation, for an expansion !o an unhealthy degree is* no longer accompanied by a shrinkage in the resources of the banks below the limits imposed by common prudence. Tn other words, the American banks can no longer regulate their policy by the proportion of their cash reserves to their liabilities, but are forced to govern their actions by tbe general trend of prices. This involves a raising of discount rates which is likely to be resented by the trading community and if carried far might prejudice industry. It lias been seriously suggested, therefore, that what is termed America’s excess supply of gold should be set apart and no longer permitted to eider into the balance sheet of the Federal Reserve Board and so into the laily life of the country. This is hardly practicable, for even though the balance of trade may bo against. America, there is the circumstance of the payment of instalments by Britain on UnAmerican debt, which might have to take the form of further gold .lil;ments to the States, and if such goal is simply lo he set aside and virtuadv ignored it will do no good to anybody.