RISE IN BANK RATE

Hokitika Guardian, 9 February 1929, Page 5

RISE IN BANK RATE

* A BLOW TO INDUSTRY. (United Press Association—By Electric Telegraph—Copyright). LONDON, Fch. 8. The “Times” City Editor states that the raising of the bank rate ■immediately bad the desired effect. The exchange on New York rose to a level at which gold'shipments became unprofitable. In other words, monetary equilibrium lias been established. The raising of the rate could no longer be avoided without further trouble. Gold would have continued flowing out, and would probably bare forced lip the rate to later in the'year. Postponement would have lost the hank seven millions in gold, which equals ten weeks’ inflow from South Africa, and the eventual reduction of the rate would be delayed to the same extent. The “Daily News” in an editorial, raised the question of Treasury responsibility in acts like the raising of the hank rate, the effects of which were most unfortunate to industry. It says: We do not believe the present hole and corner system of regulating a. vital national concern by a few experts will long be tolerated. The public will rightly, demand that the Minister take responsiblity in explaining and defending such decisions. The Financial News states: Nobody can pretend that tbe increase was anything but an unfortunate necessity, but business men should not give its depressing effect undue psychological weight. There might be evidence of oincr conditions favoring industrial expansion. The “Morning Post” does not believe the general run of business will be checked by a moderate rise in the price of money. The “Daily Chroncile” describes the increased bank rate as a crushing blow to industry. Nothing in the in-, dustrial situation warranted the rise, which is due solely to conditions in the United States, where money is earning so much more than here, that American balances arc being withdrawn from London.