AUSTRALIA’S AMERICAN LOAN.

Shannon News, 21 July 1925, Page 4

AUSTRALIA’S AMERICAN LOAN.

GOLD STANDARD CHECK ON OVERLENDING. RUBBER BOUNDS HIGHER. (Received July 19. 5.5 p.m.) LONDON, July 18.

Features of the Stock Exchange during- the past week have been the rubber share boom and the marked strength of gilt-edged stocks, the latter. of course, being responsible for the decision to issue the Commonwealth’s loan forthwith.

The rubber boom, on Monday, produced the wildest Stock Exchange scenes witnessed since the war, feverish buying being carried out without regard to price, or the values of particular shares. This -wild orgy received a check on Wednesday, when, in consequence of a slight reaction in the price of raw rubber, tens of thousands of shares were rushed on the market. These, however, were soon absorbed and the market rallied. No real slump in these shares need be expected till, the price of raw rubber drops considerably. Hitherto Ihe Government has refused to. interfere in the Stevenson production control scheme, regarding "the present fancy raw rubber prices as merely a temporary' phade which will soon right itself.

The Commonwealth’s departure in its loan policy in going to New York for three-quarters of its present loan requirements has occupied a conspicuous place in all financial reviews, and the London portion of the loan has been well received. It will meet 'lie gilt-edged market, which has steadily improved in the past three we'eks, under the influence of the Dank of England gold position and strong bank returns. Now that the Commomv’ealth’s arrangements, have taken definite steps, the reasons and influences which brought about the decision partially to forsake the London market form the basis of innumerable newspaper articles upon London’s general position as lender to v the Dominions and Colonies. The tone of financial writers’ comments upon this subject seems everywhere to vary in accordance with their views upon the wisdom or otherwise of the recent return to the gold standard. “The Nation,” for instance, says: “The financial press does not. seem quite clear as to its attitude toward the Commonwealth’s decision to go to New York. On the one side, it is argued that we have dangerously over lent, bad trade and over high consumption having reduced our capacity to lend abroad.” “The Statist,” on the other hand, says: “It is urged that only by lending abroad can trade be improved. There are many factors tending to check over-lending, but the effect of fhe Trustee Acts has beien to enable Colonial Governments, whatever their financial records or capacity, to raise money on almost as good terms as Britain. For our part, it seems more important to know whether Australia has been over-borrowing than whether we have been over-lending.” Other writers emphasise that the return to the gold standard was decided upon with the Dominion's concurrence and support, and it was probably recognised at the time that it would necessarily entail limiting London’s external lending.” “The Statist” welcomes as a virtue of the gold standard the fact that it has given a clear indication of how far the country is capable . of lending abroad. To the argument that the embargo on foreign investments and the necessity for the Commonwealth to go to New York proved that the gold standard had been inimical to the country, the paper replies that the country cannot lend more than it saves, that Britain at present is barely making ends meet and that consequently the gold standard’s automatic check to over-lending should be welcomed.