The Daily News. THURSDAY, SEPTEMBER 7, 1922. BRITISH TRADE REVIVAL.

Taranaki Daily News, 7 September 1922, Page 4

The Daily News. THURSDAY, SEPTEMBER 7, 1922. BRITISH TRADE REVIVAL.

The tone of optimism which marks the latest review of British trade appears to be well justified. There are indications of a steady industrial revival that points to a recovery from the recent depression and a return to pre-war activities. The two chief factors in this welcome improvement are cheaper money and increased demand. By the lowering of-the Bank of England minimum rate of discount from 3J per cent, to 3 per cent, on July 13, the pre-war level was at last reached. Not since, April, 1909, when the rate was 2J per cent., has the Bank rate been lower than it is at present. It is noteworthy that the drop in July was the fourth reduction made during the current year, and the eighth since the seven per cent, rate in the spring of 1920 marked the final stages of the post-war trade boom. Following the bank-rate announcement, the London clearing banks reduced their interest rates on deposits from If to 1 per cent. As a matter of course their rates of interest on advances fell in sympathy with the Bank-rate, yet although the banks in the Dominion raised their rates for accommodation when the Bank of England rate went up, they are still maintaining these high rates, and are endeavoring to justify their policy, though that is an impossible task. Trade is financed chiefly by bills, and in Britain bill rates are automatically reduced with the Bank-rate. This means that money to finance business transactions can be obtained on easier terms, hence trade revival is stimulated. This operation, together with the lower cost of production, have been the means of giving a solid foundation for increased business, besides proving of material assistance to the Government in the task of reducing the annual cost to the taxpayers of the nation’s enormous floating debt burden. The heads of important industries in the Motherland appear to be genuinely optimistic regarding the future, despite the unsettled state of affairs in Europe and elsewhere. The Dominions, as producing countries, are greatly interested in the conditions prevailing in Britain. for the greater the prosperity there, the better for the producers. The outlook for dairy produce had decidedly improved, but the producers must be prepared to fully realise that the boom prices are a thing of the past, and it would be wise on their part not to expect any great increase on present values in Britain, though they may obtain better results by tapping new markets. In this connection there appears to be some prospect of doing direct, trade with France, and it would seem that no efforts, should be spared to discover and exploit as many new markets as possible. New Zealand dairymen can compete successfully with any other country exporting butter or cheese, provided they take the necessary steps to turn out articles of the primest quality. The one advantage that Denmark and Canada possess is in being nearer in distance to the markets they supply. On the other hand, owing to climatic conditions, those two countries are at a much greater expense as regards artificial feeding and housing stock for several months in the year. The only way in which the producers of New Zealand can partially overcome the greater expense of transport is to secure cheaper freights, and being relieved of thefheavy burden of taxation which is now draining their resources. The urgent requirements of the country are that the banking business be put on a satisfactory footing, the cost of administration reduced to bedrock, land values adjusted, and the work of development and greater production practically undertaken in priority to all other demands. New Zealand does not want to be like the frog in the fable.

ANOTHER LOAN. That the Government .proposes to raise a further loan of four millions for public works will not cause any surprise, for it was obvious when the last loan was floated that it would not suffice for the works to which the Government stands committed. There is so much to be done in opening up the country’s resources that necessarily recourse must be had to the London market for the necessary funds. Mr. Massey does not propose to raise this further loan until after the end of the current financial year unless it is a matter of necessity, and he considers it would be better not to increase the country’s borrowing by raising two loans in twelve months. In this his judgment appears to be sound. The London money market is in a very favorable condition, and is likely to remain so unless any international complications occur. New Zealand must for years to come go outside for developments 1 capital, but so long as it is utilised for reproductive works no valid objection can ibe raised.