MONEY AND BUSINESS AFFAIRS.

Manawatu Standard, Volume LX, Issue 118, 17 April 1940, Page 4

MONEY AND BUSINESS AFFAIRS.

THE MONEY MARKETS. (lly “H.J.K.”) It is scarcely correct to speak of money markets just now, for the money systems of most countries are more or Jess chaotic, presenting the authorities with many stiff problems to solve. In any case with international trade cut in every direction money does not figure much in connection with’trade. 'J ho neutral States of Europe have been sharing a common experience during the past six months in seeking to insulate themselves as far as possible from the dislocation of war and to maintain their economic structures intact. According to the Amsterdamsche Rank, the aim of the Netherlands Government is to mitigate and normalise the consequences of the emergency situation. It docs not pretend to annul the changing conditions. It is emphasised that the existing situation includes a number of contradictory and incalculable elements, some of which may cease to bo of importance, while others, as yet hardly recognised, may prove determining features of the situation. Among the most important modifications arc the increased demand on the homo market, the difficulty of obtaining raw materials, and the stagnation of exports- This latter is pretty general, and accounts for the shrinkage iii international trade. This makes it abundantly clear that the aftermath of the war will present numerous difficult problems. The nations must rebuild and replace the wastage of war, and that means that there will be a universal demand for money and credit. Under the pressure of this demand money rates must harden. Britain will not be in a jiosition to do much in the way of helping other nations, for she will need all her resources for her own revival. Nevertheless, Britain will find wavs and means of developing trade, and increasing trade would be the best panacea for the economic ills that will he experienced by all the nations alter the war. The President of the Hungarian National Bank takes a somewhat similar view as that held by the Netherlands Bank. He emphasises the necessity for maintaining a sound equilibrium between national production and the increased demands made upon it as a result of the needs of national defence at a time when, owing to the war, every European country finds itself subjected to an increasing degree of enforced autarchy. At present all Governments are making an increased demand on national production, while the consumer demand for goods is also increasing. Britain is endeavouring as far as possible to meet the war expenditure out of taxation and current savings. This latter of course means borrowing, but there are ways of borrowing. A loan could be floated as was the case a few weeks ago for £300,000,000, hut such an issue does not attract the small man with limited savings. National savings certificates meet the case of the small man. For example, a savings certificate costs 15s, and at the end 'of 10 years the State redeems the certificate at 20s 6d. The saving has been growing steadily each year and there is the added advantage of the capital lieing safe. In this wav Britain is borrowing from the small people. And the sma-11 mail is generously treated for the interest over a period of 10 years works out at £3 Os per cent. These certificates are very popular with the people who have contributed many millions in this way. AMERICA’S PART. America lias done a little towards helping the smaller nations, particularly Finland, Norway, and Sweden. This assistance became, possible and acceptable to the European countries because of the change in the tariff I policy of the l nited States. It has never been difficult to borrow from the United States; the difficulty has been in repaying the loan and meeting the annual interest payment. Up to the time that the Roosevelt Administration introduced reciprocal trade agreements debtors to that country were obliged to pay in gold. It is doubtful whether the 1 nited States will do much in international lending, but what America could do would lx? to redistribute some of the huge store of gold she holds. Of course all the gold does not belong to her, for not a little of the metal was consigned to her for safe keeping, and when the war ends this gold will return to Europe. The Germans who have invaded Norway and Denmark are paying for supplies in “chits” or pieces ol paper alleged to he promises to pay. Moreover. the exchange value of the different countries has been fixed arbitrarily and in Germany’s, favour. These notes are just scraps of paper of no actual or potential value, lor they will never he redeemed unless enforced at the point of the bayonet. In the meanwhile Denmark loses her valuable trade with the United Kingdom, and what is more she is unahlo to import the necessary foodstuffs for her dairy stock, pigs, and poultry. Denmark docs not grow enough fodder for this pnrpo.se and a. great deal of if has to he imported. ‘lf the livestock cannot he properly fed, production must fall off and probably there would follow considerable mortality. There is some pro'pect of great changes in the dairy trade of the world and New Zealand should profit by the change. IMPORT RESTRICTIONS. The v import restrictions have been further tightened, many lines ol imports being absolutely .barred I rom entry into Dominion ports. This tightening will not be felt immediately, for it affects imports that were to lie ordered in the second hall of the year. The immediate effect would he curtailment of staffs, for as goods in stock are sold out there would he less work. Motor-vehicles of (ill kinds are prohibited from entry, which means that no new motor ears can he brought into the country. But dealers must have some compensation in the fact that there may he a better sale for second-hand ears. The tightening of import restriction'in the face of increasing London funds is puzzling a good many peojde. The official reason given is that it is necessary to lmild up overseas funds in wartime. No one will deny ties, hut with about £25 000 000 of funds held hv the trading hanks and the Reserve Bank it was thought that this was liiygo enough for safetv. and therefore import restrictions could he released. The Minister says otherwise.