BRITISH TRADE.

Auckland Star, Volume LVIII, Issue 49, 28 February 1927, Page 4

BRITISH TRADE.

HUGE ADVERSE BALANCE. OFF SET BY "INVISIBLES." (From Our Own Correspondent.) LONDON, January 13. The adverse trade balance for 1926 is the largest since the war years. The peak was reached in 1918, when the balance was £7S4,000,000; in 1919 it was £663,000,000. The adverse trade balance contracted during the war was covered partly by borrowing abroad and partly by the liquidation of British-held foreign securities, practically the whole of the British holding of American securities being sold back to America. In view of the exceptional size of the adverse visible balance for 1926, the question of the value of our visible exports with which to meet this balance of payment due on trade is clearly very important. The Board of Trade, in its tentative estimates of the balance of payments for 1925, put the invisible exports in that year at £429,000,000, made up as follows:— £250,000,000 of income from overseas investments. £115,000,000 of income from shipping,. £40,000,000 of commissions, £9,000,000 of foreign ship disbursements in British ports, and £15,000,000 of miscellaneous income. After deducting £15,000,000 in respect of an excess of Government payments made overseas, the tentative conclusion was reached that on balance this country had a surplus of £28,000,000 available for investment abroad. This figure compared with £63,000,000 in 1924 and £153,000,000 in 1923. Probably the income from shipping last year was larger than in 1925, and the same applies to incomes from foreign investments. It is therefore likely that the I total invisible exports in 1926 were greater than in 1925. This is the more probable because those who have made a special study of the invisible export position have arrived at the definite conclusion that in the past the figures have v been largely under-estimated.

This view is strongly fortified by the fact that the net amount of capital invested abroad in a year is not infrequently in excess of the apparent income available for the purpose. Thus the amount of oversea issues made in 1924 was more than double the surplus calculated by the Board of Trade to be available for that purpose, while in 1925 it was treble. The oversea investments made by this country in 1926 are estimated at nearly £112,500,000. . Every years a very large sum accrues to this_ country in respect of redemption of foreign debts, also in respect of pensions payable by oversea countries to residents here, the value of whichis sometimes overcapitalised. But there is strong presumptive evidence from the amount of newcapital invested abroad that our foreign income has been considerably underestimated in the past. In view of the fact that a largo sum has been lent abroad in the past year, it would appear from the firmness of the sterling exchange that in spite of the large visible adverse trade payment we have a balance, though possibly it may be very small, on the right side of the account.