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Hokitika Guardian, 27 October 1932, Page 4

In a weview , recently published by the Midland Bank it js shown that in 1931 the world borrowed more from the United States than, that country was in a position to lend as the outcome of its transactions on current account. As a result America .surrendered a considerable amount of gold. This year, however, the, export surplus lias declined, interest receipts have fall jn away and nothing lias been remitted on account of war debts. There have been fads on the debit side of the account, but not enough to compensate for the aggregate fall in credits. ' It ’ seem®, then, that the United States has to coyer a deficit on its current account fully as lai-ge an the surplus of last' year.' .In other words, America ham no surplus for investment abroad, Th© , American balance of payment statistics reach back to 1922, and in each;;of the ten years the current recount has shown a surplus. The 1932 position, therefore is probably unique. Great Britain’s' status of creditonship dates from long before the, war. From 1922 to 193 Q every year, with the exception of 1926, showed a- surplus for new investment abroad. Last year there was a deficit; Britain’s imports ,of goods and services cost her considerably more than she reoeried in payment for exports and services rendered, and in respect of interest. As with the United States, this position was arrived at chiefly by way .of a heavy curtailment of exports due to impoverishment of buyers, and to a severe reduction in the yield of incomer from oversea investments. Compared with last year, the balance of merchandise exchanges this year has moved in Britain’s favour, t,ut this is probably counteracted by a further decline in shipping receipts and income from investments overseas. Britain, then, is still -working on a deficit in respect of current account,.and is covering the deficit by drawing on her capital abroad. Th© position of France, the third great creditor country, is much more difficult to gauge. The available data are less comprehensive and reliable, and tlie unofficial estimates so far published carry the story only to 1930. The bank thinks it probable, however, v’-.at last year’s current operations resulted in a small deficit. This year, partly or wholly by virtue of extraordinary restrictions on imports, the excess of merchandise imports over exports is running at a lower figure, than in 1931. But on the credit side reparation receipts, which exceeded war debt payments, have ceased, and income from tourists and oversea investments has declined , s o that a more substantial deficit appears on current account ais a whole. There can be little doubt that France, like Great Britain and the United States, is paying' for a part of her imports of goods and services by realisation of capital abroad. This conclusion is by no- means contradicted ly- her eno-mm.-, gold purchases, which represent simply the medium for -rep.-trintion of funds previonslv held abroad. These three great creditor countries, theft, have arrived at, much the same position in reject of their trading rod capital relationships wi.'li the rest of the world.