BRITISH EXPORT TRADE.

Taranaki Daily News, 18 February 1922, Page 7

BRITISH EXPORT TRADE.

GOVERNMENT GUARANTEE OF CREDITS. AN OUTLINE OF THE SCHEME. His Majesty’s Trade Commissioner in New Zealand has now received details of the Trade Facilities Act which has recently been passed in the United Kingdom for the purpose of extending the facilities granted under the export credits scheme, frequent reference to which has been made in the New Zealand The new Act provides that the Imperial Treasury may guarantee the payment of principal and interest of loans which may be raised by any Government, public authority, corporation, or other body of persons for the carrying out of any capital undertaking, provided the application of the loan is calculated to promote employment in the United Kingdom. The Treasury have no power, however, under this Act to make advances or grants. Applicants desiring to take advantage of this scheme arc required to supply certain particulars as to the proposed general conditions of the loan; the amount of the loan which will be spent in the T’nitwl Kingdom; the expected benefit, as regards employ ment; charges which can be given to secure the loan; the additional revenue expected to be earned as a result of the loan; how it is proposed to pay the interest during construction; what evidence there is that the orders for plant, etc., will be given in the United Kingdom; what evidence there is that the loan will be sufficient to complete the undertaking; what preliminary formalities are necessary to secure authorisation for raising the loan; what attempts have already been made to finance the scheme; and whether any guarantee is proposed as additional security. Generally speaking, the Advisory Committee which will examine applications must be satisfied that the scheme cannot reasonably be financed without Government assistance, and that it is of such a nature as to reduce unemployment in the United Kingdom, and to secure adequate benfit to the public in return for the public assistance given. Preference will be given to applications which ensure immediate placing of orders for export; applications under which securities can be readily issued to the public; applications to which a minimum of financial risk attaches; applications for schemes which will be quickly completed; applications from within the Empire; applications under which orders will be placed in the United Kingdom. In addition to the part of the scheme which refers to the guaranteeing of loans for public and similar works, the new Act extends the facilities of the export credits scheme in so far as that scheme relates to the guaranteeing of drafts for I general trade purposes. This scheme now applies to shipments to all countries. excluding India, Ceylon and the Straits Settlements. It provides for the '\aranteeing of credit given by export-

ers, by Government guarantee of drafts drawn against the shipment of goods from the United Kingdom. This guarantee will be given either by a general guarantee of credits or by a guarantee of credits in respect of specific transactions. Guarantees will only be granted in respect of goods wholly or partly produced in the United Kingdom, and applications for such guarantees must be made by the exporter through his banker’s recommendations attached to the Export Credits Department, 73 Baeinghall Street, London E.C. 2. The department will fix and charge commissions to defray the expenses of the scheme and to form a fund to meet losses. It will not entertain applications to finance the carrying of stocks either in the United Kingdom or overseas or applications in respect of goods to be shipped on consignment. As far as general credits are concerned, the department is prepared to consider applications submitted as above outlined, for credits up to specified amounts in respect of specified countries and for specified periods. An application of this kind having been granted, the exporter is at liberty to enter into transactions abroad up to the amount fixed, and the department will undertake to guarantee the bills for goods shipped. The department will not require under this part of the scheme that security should be put up by the importer, but in case of default will retain recourse against the exporter for 57A per eent. of the ultimate loss.

In the case of credits in respect of specific transactions, each transaction will have to foe submitted the department. The guarantee may be given for the full amount of the bill of exchange if the credit given does not exceed twelve months. The department will not require that the bills should be accepted before guaranteeing them, but will require letters of guarantee from the importers’ bank. A deposit of security on the part qf the importer is provided for; this is npt compulsory in all cases, though the question of whether or not security is put up will be taken into consideration in fixing the extent of the guarantee, and it also affects the extent of the recourse which the department may have on the exporter. The above is a short summary of the scheme only: a few further particulars are available ip the office of His Majesty’s Trade Commissioner. It will be noted, however, that while the scheme is of considerable interest and importance to importers in New Zealand, providing as it does for extended credits being given to them by exporters in the United Kingdom under Government guarantee, all applications for benefits under the scheme must be made by exporters in the United Kingdom.