BANK RULE

Hokitika Guardian, 26 March 1930, Page 5

BANK RULE

TK AY El/LERS R ESTRICTED

ABUSE OF BANK NOTES

SYDNEY, March 13. The announcement of the Commonwealth Bank that the privilege of encashing Australian notes abroad would be withdrawn does not mean that a complete embargo has been placed on travel l>v Australians beyond their own

shores. There has been no general refusal to grant ciedit to those who desire to travel abroad, hut it is a fact that the expenditure of those who leave

these shores has been severely restricted. Few travellers have been able to obtain letters of credit for tlie whole amount that they have required.

It is certain that many travellers

have abused the service of the Tranks. Therefore letters of credit have heeu rationed, and people have been asked to do with lsss than they originally

intended to take away with them. Cases have come under notice where, obviously all the amount asked for has not been for travel!. The largeness of the amounts has made it appear that some of the monev was required for the purchase of merchandise. Naturally in such cases, onlv the amount needed for travel has been granted. Some travellers have believed that they were entitled to take away with them as much money as they liked. They know that they are not.

Extravagance abroad will be impossible, for each letter of credit has been restricted to what the issuing bank estimates to be the strict travelling and living excuses of the applicant. In the past many travellers took sufficient money with them to buy wearing apparel, and other commodities to bring back to Australia. As imports by merchants are being restricted, it is felt that to allow travellers to use London credit for the purpose of bringing back to Australia goods that the merchants are prohibited from importing would be unjust. It would he closing one door, and leaving the other open.

The banks have been strict in refusing letters of credit to people who are not their customers. Each man must go to his own hank. An exception has been made with the depositors ot the saving banks. Were letters of credit absolutely refused outward passenger traffic on the shipping lines would come to a complete standstill, whereas the tourist traffic this year is quite as big as in an ordinary year. Credit facilities arefbrougt into the country just as they are taken out. in a general way it is a reciprocal business and any interet'erence on one side would lessen the general detriment of Australia.

The action of the Commonwealth Bank in cancelling arrangements with foreign banks to encash Australian notes presented to them by travellers has been forced by the abuse of the privilege. Travellers from Australia have had the privilege of encashing Australian notes in amounts of not more than £25 at any port or town where there were Commonwealth Bank agents. For nearly twelve months past the bank has found a continual increase in the notes that have been presented abroad, and of recent months the amount has swollen enormously. It has been nppnrent that privilege has been used first to obtain cheap exchange, and later to defeat the object of restrictions, when the restrictions were placed on imports. It has been apparent that notes in amounts of thousands of pounds have been sent away by post and on reaching their destination have been exchanged in instalments for goods purchased. In Great Britain exchange was arranged at par, and m some other countries too, but m others it was arranged on the basis of the most favourable terms, that is terms on which transactions .would take place between the two banks.

So far as is known the nationals of no other country have the privilege which hitherto has been accorded to the people of Australia—exchange on these favourable terms of their bank notees while travelling abroad. It should be clearly understood that the restriction on the encashment of Australian notes in no way reflects on the general credit of Australia, which today is quite sound. Certainly the country is passing through a difficult time owing to the serious falling off of its imports, but most people have great faith that there will he a rapid recovery and that the lesson now being taught will for ever be remembered.