WELLINGTON NEWS

Hokitika Guardian, 26 June 1931, Page 8

WELLINGTON NEWS

BANKING AND FINANCE,

(Special Correspondent)

AY ELLINGTON, June 24. Banking and Finance are likely to occupy the world’s stage during tho next few months. Finance has not been out of the picture, but banking is now likely to take a prominent place. A Committee set up by the Socialistic Government in Britain appears to have .sent in ai report which js detrimental to Britain’s export trade. If the anticipations with respect to tile report a,re correct, it seems to fit with the denunciations of Professor Ga.star Cassel of the policy so far pursued by Ebropeon Central banks and also by the Federal Reserve Banks of the United States. There are, of course, two sides to the matter and wo must wait and see what the. Bank of England authorities have to say in justification of their past policy. Financial questions are bound to have.' prominence during the next few weeks owing to the serious economic conditions ruling in Germany which is impairing her capacity to meet her reparation obligations. Germany has hitherto paid her way with com men dailile promptitude, but this has mien due to the steady influx into the . vuntrv of loan funds obtained mainly in the United States. That inflow lias petered out and Germany has been forced to create a favourable trade balance on a Large scale, and she lias been able to achieve' this to some extent by selling her manufactures at cost, or less in foreign countries, and at the same time restricting imports There seem to be some similarity an the conditions in Germany and Australia, for both countries are unable to borrow and both are driven to the necessity of developing a favourable export balance.

Germany is certain to ask for a moratorium to which Britain and tho United States agree, but France will he the stumbling block. AI. Briand, the French Foreign Minister, lias already made that perfectly clear. The whole problem of War debts is likely to come to the surface and be subject to a new orientation. A good deal will depend upon the attitude adopted by the United States and the visit to London, at the present juncture, of Air Andrew .Mellon, the United States Treasurer, is rather significant. President Hoover is casting about for ways ancli- means of assisting Germany and Senator Borah, the Chairman oi the Foreign Relations Committee, lias stated publicly that there is nothing to be gained by forcing Germany into economical chaos. International finance will lie a burning topic presently, and wlmt the upshot will bo no one can predict. There is some consolation to be derived from the fact that the world wide depression is developing a kindly follow feeling among the evidence of this. The nations will try to meet one another, but there is always France to lie reckoned with.

Reverting to the Bank of England, it is desirable to call attention to the fact that tho gold reserve of the Bank has been steadily growing. The returns of the Dank of England for the week ended, Wednesday .May Oth., showed the gold in the Issue Department to* total £147,506,074, and on Wednesday of last week, June 17th. the amount had increased to £IOO,926,670, an increase of £13,420,296 in six weeks. Furthermore, a shipment of £5,000,000 in sovereigns from Australia will bring more strength. It is also apparent that money is in abundant supply in London, and there docs not appear any reason why the Bank Rate which now stands at 2' per cent, should not be reduced to 2 per cent., the traditional minimum rate of the Bank. This change should be effected on Thursday: if so, we should know all about it on Friday. Cheap money is very much needed just now, for cheap money lias a way of reviving enterprise and stimulating industry and commerce.