GOLD FOR AUSTRALIA. [WEEKLY PRESS.]

Te Aroha News, Volume I, Issue 38, 23 February 1884, Page 7

GOLD FOR AUSTRALIA. [WEEKLY PRESS.]

The news contained in our telegrams from London of the continued shipping of gold to Australia has naturally attracted a good deal of attention. 80 unusual an oceurence has given rise to not a little uneasiness in some quarters, and the remarks of some of the London papers on the subject have not tended to allay that feeling. It is worthy of notice, however, that those depreciatory remarks appeared immediately before the Victorian Loan was being placed on the market. Tuose of our readers who have watched the proceedings of the Stock Exchange know that its members are not above making use of an opportunity of the kind to promote their own objects. For many years the colonies were content to raise loans at such prices as the Stock Exchange dictated, t.iu& leaving room for) leu ty of. speculation on the part of its members. More recently, however, the colonies have been insisting up 11 obtaining the full market price for their debentures. This independence has naturally been resented in stock jobbing circles in London, and hence, we may be sure, the appearance of these warnings about the danger of overstraining their credit, of which we have heard so much of late. Just about the time the Victorian £4,000,000 was about to le placed on the market, it was announced that shipments of gold were being made to Australia. It was hinted that there was some dark mystery about the proceedings, and that something really serious »vas about to happen to the leading colonial financial institutions. The Victorian loan was nevertheless floatel above par, and since then the insinuations as to some impending disaster have not been repeated. One journal actually assorts that it is not to relieve the pressure in the colonies that the shipments have been made, but ib the natural outcome of a state of things easily explained. • In the colonies also the proceedings of the banks have led to some discussion regarding the real cause of these withdrawals. At the annual meeting of the Colonial Bank at Dunedin the other clay, the Chairman, j\lr E. B. Cargill, referred to the subject. He pointed out that such a thing had not taken place to anything like the same extent within th«j last thirty years or more. The fact of the shipment of sovereigns within a few weeks to an aggregate amount of some thing like a million sterling had, lie saul, give rise to a I sorts of prognostications of bad Limes and of scarcity of money in the colonies. But h« could not find that there was any reason to put such an interpretation upon the transaction. Mr Cargill's impres- 1 sion was that then was something in it " from which we might draw views of tome improvement in trade. He could see no other reasonable explanation than the fact that there was much more value .lying iji LoruUm than the ordinary ex- ! ports or trade of the eoionies provided the means of sending out, an-l it had become, necessary to relieve lliat large sum lying at home by remitting it to the 1

colonies." He pointed out fiat t.iere, wae a gnvtt deal of value goi.ig home, I There ay tis the value of a very Inrge wool clip from the colonies ; there was also large export of wheat, which must come forward shortly ; and " then there ! was the amount of the loans recently raised in London for the various coloniss, amounting 1 to a very large sum in the aggregate — all of which values hail to find the r way out here in some shape or other." Mr Cargill thought it was a somewhat hopeful thing to find that importers were not so ready to rush out an enormous value in goods without reference to the consequences, " and, therefore, the financial associations were compelled to "ship out money in lieu of other value. The Melbourne Argus lakes a somewhat similar view of the situation. It says that one of the apparent reasons for the reversal of the gold current, " is the accumulation in England of Australian banking resources, and other funds belonging to the Australian colonies." Our contemporary points out that the excessive importations of years have at length been checked, anil the trade of the ports of Sydney and Melbourne is quoted in illustration. It is shown that in their case alone there was a decrease of over £300,000 in the i imports of 188$ compared with those of 1882. On the other hand the exports of Sydney and Melbourne for 1883 exceeded those of 1882 by nearly £3,000,000. This, our contemporary points out, shows how the proceeds of Australian production from two ports only have been accumulating in London. The same state of things prevails to a greater or less extent all over the colonies. Shipments of goods from England are shrinking, so that the decline disclosed in the cases of Melbourne and Sydney would probably indicate a very material falling off were the figures lor the whole of Australasia available. On the other hand it is undoubtedly the ea c that there is every prospect of a vast export of wheat taking place this season from Australasia. " There is a large wool clip to come to our credit : and superadded," continues our contemporary, " there arc the proceeds of the New South Wales loan (£3,000,000), the New Zealand loan (£1,000,000), and the Victorian loan (£4,000,000), the bulk of all of which has, in some manner, to find its way to the Australasian Colonies." • There is yet another reason given by the Argus as adding to the 'existing difficulty of settling the balance of exchange without a transfer of coin. Two years ago, when the rate i of interest was low in the colonies, more than one of the Anglo- Australian banks found it conveniet to employ part of their funds in London rather than in Australia. But the recent demand in [ t,.e colonies hasjiltered the situation of affairs, and is leading to a re-transfer ofthe money. These and other causes, sucu as the shipment of gold from Victoria in excess of the local production are sufficient in the opinion of our contemporary frully to account for an occurrence •* unp.ecedeiited in the annals of our business relations with the Mother Country." But while this shipment of gold is to all appearance the result of temporary causes, rather than a serious dearth of gold reserves in the Banks, it is nevertheless pointed out that to a superficial observer there is some justification for the opinion of the Daily News that gold importations have been made for the purpose of strengthening the Bank reserves. On September 30th, 1881, the proportion of coin rcsei ye to liabilities of the Banks of the seven Australasian colonies was 17 and a half per cent; on September 30th, 1862, it was H and a half per cent ; and on September 30th, 188J5, it had fallen to 18$ per cent. At the same time, however, t.ie nature oF these liabilities had altered materially. The amount «t fixed deposit had increased and the deposits at call proportionately diminished, thus doing away, to some extent, with the need for ready coin. On the whole, then, it seems to be the opinion of those more or less acquainted vith this question, that the movement of gold towards Australia 1 need not only cause no alarm, but may be regarded as a hopeful sign of an improvement of trade in the immediate future.