WELLINGTON NEWS
STERLING EXCHANGE. (Special Correspondent). WELLINGTON, December 7. Too much must not be made of the vagaries of sterling exchange. Europe ds now buying cotton and wheat in the (United States and the payment for these commodities are made through London, the world’s clearing house. In addition to this there is the abnormal importations of October and November to be paid (for, and above all there is iwhat Professor T. E l ., Gregory calls “the crisis of confidence.’’ Foreign countries whiich are more or less weak themselves financially are' naturally very
scai«d and it does not take much to
magnify the position for them. They j would naturally withdraw . any credit they possessed in London. London is v still the clearing house of the world and its greatest financial centre, not- '■ withstanding that the pound • sterling in terms of dollars is worth, only 14s. ,L- In the crisis of 1920-21, when Britain -was off the gold standard, as she. is & now, and when sterling was sharply deteriorated as the result of the war. j*. England’s credit was still very high,-and she (could'get all the dollar credits she iy wanted. -She is not appealing for dollar credits now and seems to be permitting sterling to njove'up and down oa tif a point of Stability is reached. Cnq one can guess the point of stability for that has yet to be determined. But ' there need be (no alarm as to the outcome of the exchange crisis, England has about £200,000,000 or more invested in United States and Canadian securities, and these securities are described as' easily marketable, and these securities could be easily mobilised and ..old 'in; New York, but such a procedure would almost wreck the New 1 oi k L» change, and 'the experiment is not lively to 'be tried except as a last, . jnVonrre. but. long before that becomes (necessary England , will have won o t.. The commercial world cannot do without London, and London’s mag i irl-ent resources, knowledge and prestige. A very large part of- the world s capital was intangible capital, and consists of $ organisation, good will, established trade relationships, knowledge and technique, prestige and courage and the money of London.. - Bills are drawn upon London from all parts of the world. She is the world’s i commercial banker and broker Millions of sterling exchange are bought, and sold and • the, world cannot ; get along withoiit the very necessary facilities and machinery that London provides. New York, and Pans have more gold, more physical money, vet +hev cannot replace London'' which has built up its position over. - a period of a hundr-tt years. The ‘ United' States and France . would be obliged to change their fiscal policies, their banking and commercial laws, and would furthermore have to .secure the confidence and good will of (the trading world:' This cannot be
.secured in a day or a week or a. month. V, Any unsettlement in England .whether political, financial or commercial has its repercussions throughout the world. The trading world must in its own interests aid in the speedy rehabilitation of ■London anfr aid her to recover her oldtime liquidity. Her funds freely lent to Germany and Austria, in her capacity of commercial banker, have become frozen because those two countries are on the verge of insolvency. Germany is seeking help, and must get it. In prewar days the London money market ■held a /large volume of the “quick debt” of the outside world, a substantial part of which matured daily, and which need not he renewed, and need be renewed only at an advance in rates. There was a great community of expert students of commodities and there was a great body of expert speculative buyers who were ready to operate at any moment because they knew their outlets. What came to London became 'liquid, and everything came to London. This is true of London to-day, but abnormal developments during and since the war, have caused modifications. London must recover her position of that we may be quite certain,
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Hokitika Guardian, 9 December 1931, Page 2
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673WELLINGTON NEWS Hokitika Guardian, 9 December 1931, Page 2
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