BANK RATE UP.

Auckland Star, Volume XLVII, Issue 168, 15 July 1916, Page 6

BANK RATE UP.

NOW SIX PER CENT.

DUE TO CONDITIONS IN AMERICA. (Australian and N.Z. Cable :-' LONDON, July 14. '1 The British bank rate, which has been; ~ 5 per cent since August 8,1914, has been raised to 6 per cent. The rise is due entirely to a sharp rise ' in the value of money in New 'York ■ since the end of last week, probably the > ■' outcome of American loan operations ) including loans to the Allies, arid also' the expansion of trade activity. The rise in New York came as a sur- : prise to London, as it was believed that there was considerable loanable capital - ' still available in America. The possibility of a rise in the London bank rate was only seriously envisaged ' last evening. Financial circles generally approve the step as a precautionary measure designed to promptly allay any feeling of unrest. The future depends chiefly on Ame'ri-.... can developments. It is hoped that the increased rate"-' will only be temporary, biit it is regret- v ted that it may indefinitely postpone • the big long-dated war loan which was " anticipated in many quarters. '-.

FRENCH WAR LOAN.

£20,000,000 FOR MUNITIONS. (Received 11.15 a.m.) WASHINGTON, July 14; >- v ; The French Government has arranged • for the raising of a loan of about- 1 £20,000,000 in America in order to pay— fpr munitions purchased in that country. \ A statement lias been issued by J. Pli';£ Morgan and Co. to the effect that an A"; American corporation, known as. the i. American Foreign Securities ' ie being formed to issue a loan of ' 95,000,000 dollars at 5 per cent interest, '■ with a currency of three years. Its notes 71 ■will be-secured on the basis of 20 jper . cent margin by obligations of the Governments of Argentina, Sweden, Norway, ' Denmark, Switzerland, Holland. Uru- ".■>■ quay. Brazil, Egypt, Spain, and the' Province of Quebec, by shares in the Suez Canal company, and by .bonds' and shares in American corporations. liOCAL MABKET NOT AFFECTED 1 . V N The announcement made in last niglit'3 cables from London of the increase in the British banking rate from 5 per .cent} ".L. to 6 per cent hae created a good deal of . interest locally, and there was naturally .."■.': some speculation as to the effect df-th? change on the New' Zealand money 'market;. : . On being interviewed by a "Star" «!•■;: preventative this morning, a local banker- 'S stated that it was not anticipated that -: the rise in London would affect New :r, . Zealand conditions in the least. There' was certainly no immediate prospect ; ; ; that there would be a corresponding rise in the rate-charged- for-iloan .lgoflfjf,. ■ within the Dominion. At present "' we i were in the position of being able to raise our .Government, loan moneys, in XeW Zealand, and the prospects were that ■ unless poseibly for the purpose of raw- . ing the big loan provided for in the.Fm- '■'■'■ -■ ance /Bill, we would refrain "from ap- ■ proaching the Mother Countryfor finan- .-:" cial assistance. Questioned as to the reasons for the . ■ advance in England, ie said that it wto ' entirely due to the conditions prevailing in New York. Tlie Americans had made huge profits out of the war, and were, now in what was for them the novel : position of controlling the money market. It was the old position of supply and demand, and as the demand was dently so great that 6 per cent could bel'K ! demanded by the leader and obtained,' -', the British rate was advanced accordingly in order to attract the. necessary -v capital. Indeed, it appeared that the , i sharp rise of the value_of money in New V ;'■'■.*■ York owing to the operations in the;,! market there left no other, course open. ?