BRITAIN’S MONEY MARKET

Sun (Auckland), Volume II, Issue 609, 11 March 1929, Page 10

BRITAIN’S MONEY MARKET

BANK RATE MAY RISE GOLD DRAIN TO NEW YORK Reed. 9.5 a.m. LONDON, Saturday. Fears of a further rise in the bank rate are overshadowing the Stock Exchange, and declining prices are the rule in almost every market, gilt-edged being especially weak. The reason for the continued depression is the uncertainty of the position in the international money market, and the weakness of the American exchange, which to-day is indicating a possibility of an early resumption of the gold drain from England to New York. Unless there is an improvement m the American exchange before Tuesday, it is feared that New York will secure gold arriving here from South Africa, and also take some from the Bank of England. In this event a rise in the bank rate would probably be necessary. The position is thus described in the “Financial News": “It appears that whether or not the Federal Reserve Bank of New York succeeds in curbing speculation, the drain on funds for New Y'ork will continue for some time, so there •will be an incessant pressure on sterling. In such circumstances, it is understandable that the. money market is uneasy, and the possibility of a rise in the bank rate is being freely discussed. There is no doubt that the next month or two will be the most critical period in our history since the restoration of the gold standard.’’

But although the stock market is so weak, there is no check to the tlood of new issues, which are (lowing .as strongly as ever, and many new ventures of a decidedly speculative nature are

being eagerly subscribed, speculators being ready to take risks, although (as one financial paper says) probably a large proportion of them have neither the desire nor the means to hold their allotments of new issues indefinitely.

This week’s new flotations amount to £9,067,831, despite the fact that there has been no Government or municipal borrowing. The total of new issues for 1929, including conversions, amounts to £91,502,950.