WELLINGTON NEWS

Hokitika Guardian, 15 January 1927, Page 1

WELLINGTON NEWS

MKHJC'AN MOXKY LOB A I'STR ALIA.

(Special to ” Guardian.”)

WELLINGTON. dan. 12. Mr Stanley Bruce, the Prime .Mil - ister ol (he Commonwealth, has been suggesting to the financiers of thUnited States that they should seekinvestment In the Commonwealth. America is of course capable of 'lending immense sums to foreign countries, but Americans lack the instinct of foreign investments. They do not understand if, in the same way that the British do. and furthermore anv expansion of American foreign investment would jeopardise the American Customs tariff. An American loan to Australia would necessarily mean the transfer of American goods, or the goods of some other country with which she has trade rotations to Australia. Of course I lie I'.S. could transfer gold, but the Common wealth has now no no d of the metal, as a mailer of I'ls'ct mu many months ago the Commonwealth Bilik shipped £<>JXKUH)O in gold to the United States, the motaj not being nquired in Australia. On any loans raised in Xew York Australia would have in pay a fair ode of interest and Ihe transmission of this interest must

he effected in goods or services. The United States tariff tends to shut out goods, and thus the problem of paving the interest on debts contracted in America becomes a difficult one. If the United Sides Is to fie paid, the country must accept goods, for there is not the gold available 'in the world with which to discharge such obliga-

tions. furthermore. .America, does not want, the yellow metal of which it, already possesses an enormous quantity. Tn .advising Americans to invest, in Australia. Mr Bruce was not apparently thinking of Government: and local authority loans, but of industrial and other developments for which the Americans possess the eapitn! and technical skill. The Americans would no doubt be willing to undertake such enterprises, but their methods must he taken into account. Trusts, combine--and monopolies have reached the peak of perfection in the United States, and it, is rmsoiiablo to suppose that t.liev

int'd desire to carry such method

with them into their foreign enterprises and that would scarcely suit llu Australian temperament. While it may lie desirable to have America i capital tantl technical skill utilised in the development of the Commonwealth resources, it. is obvious that vast economic changes must take place bet ore this can he accomplished. The Americana appear pledged to one way trade, that, is they are ready to export goods, and unwilling to import goods except

iw materials, and one way trade i:

unfair and unsound. So far as Now Zealand is concerned wo hope that no effort will lie made to encourage American capital coining into the country, on the contrary the authorities would he acting sanely if they placed an embargo on American capital for we can obtain all the credit we require in the United Kingdom, which happens to ho our best and most reliable customer. Britain will take a?I tile

primary products that we can send her and pay full market: prices for name, while the United States refuses to take

our products except a few such as wool nnd hemp, and she buys sparingly id these. All things considered there is little prospect of any great flow <d American capital to either Antralia or Xew Zealand. A I'STKA I.T:AX STATU LOANS.

Tim state of New South Wales and the. Coiiimonweailth Government have large loans falling due in .Bondmi tbiyear, lnit there should be no difficulty ip aniniging for conversion issues. Both New South Wales and the Commonwealth are in need of fresh capital. particularly the former, owing to the extravagance ot the Bang Government. .New South Wales credit stands very low in l.oiidoti. and knowing this "Premier Lang entered into negotiations with the representative in Australia. for the National City Bank of New York for a loan Cin.ooo.ooo. Kvidenlly these negotiations hiive not run smonthlv. lor a cable message I I'om New York staled I hat New South Wales preferred to borrow in London rather than in New York, and lhat probably is correct. To London ill" New Smith Wales loan would he classed ns a trustee security, hut in New \ ork it would have no such standing. hurthermore in the two loan centres the procedure is very dilierenl. In Loudon i he loan is underwritten and then offered to Ihe public at, a fixed price. The American plan is bir a leading, financial house to lorn) a vindicate which takes over The issue. It then

submits the stock for gale at a price which will cover Ihe commission and expenses. Naturally the syndicate buying the loan lakes care not to pay inn high it price. In other words, it looks lor an extreme profit. As a loan centre New York is no good to any part of the British Empire.