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Hokitika Guardian, 13 October 1932, Page 4

Commenting on the financial position in Britain recently, the financial editoi of the “Spectator” stated that one of the difficulties in writingintelligently on the financial and investment outlook was due to the fact that so many of the influences operating are artificial in character, most of these- influences emanating from the Government or ‘official’ action. "When Great Britain left the gold standard, for instance, an artificially high bank rate of-6 per cent, was imposed to check speculation and prevent inflation sufficient to raise the cost of living perceptibly. Because this high rate "was maintained longer than, was necessary, its reduction caused a sudden expansion of credit. Encouraged bv this result the Treasury and the banks began to force money rates oven lower, the object being tr make possible the conversion of a large f part of the National Debt, The successful conversion of the 5 per . cent, AN aj Loan to 3} per cent, was unquestionably due in port to the belief that, with money so cheap, it might become impossible to obtain Government securities yielding even as much & 3? ner cent. During the conversion operation the money market was made more abnormal by an embargo on new issues of capital; and, though this embargo is now removed or relaxed, the market has still to recover from the violent fluctuations of the past twelve months before the future can lie regarded as anything but uncertain. Needless to say, the mere provision of. cheaper money will not necessarily stimulate investment and industrial activity.