THE MONEY MARKET.

Auckland Star, Volume LX, Issue 99, 29 April 1929, Page 4

THE MONEY MARKET.

COMMONWEALTH FINANCE.

PULLING OUT FROM U.S.A. A NOTABLE DECISION. 'Australian and N.Z. Tress Association.) ( Rpcplved 10 a.m.* NEW YORK, April 28. A brief announcement among newspaper financial notices that the Commonwealth \rency Bank here will be discontinued after June l n , fßme as a distinct surprise aid received considerable regret. It is realised here that unquestionably the principal reason for opening the agency, was for the purpose of arranging Australian financing here, a. secondary purpose, being the development of the general banking business for foreign trade. There has been no Australian financing Here during the, past year, due to the jrrn<>ral condition of the credit situation. However, this was not peculiar to Australia, but affected all foreign borrowers. Money tightness, moreover, is expected !■<•> continue for at least another six months, while some experts even decline to set any time for the duration of the extraordinary situation.

Feeling is that the Commonwealth Agency has, however, played an important role from an international point of view and that it has been an important trade factor. For instance, there has been a new development in Australian hardwood export here last year. General opinion is that the closing of the Commonwealth Agency's doors is unfortunate. It is believed tha particular date chosen for the closing is due to the fact that the agency would have needed to seek new premises on June 30, since the 25, Pine Street building is coming down shortly.

The part that the money situation is playing in closing has been well considered here and financial circles are particularly arrested by the fact that various internal issues floated in Australia, have been so successful and such good terms have been received that the whole question of Australia's going into foreign markets may require reconsideration.

Those particularly familiar with Australian banking conditions, however, ask whether a more basic and less apparent reason for the withdrawal of the Commonwealth Bank from New York is the fact that there is some impending change in the Australian banking situation as a whole, namely, that there is some possibility that the Commonwealth Bank may become a central bank for Australia, in all senses of the word. Also under the circumstances that the propriety of the latter competing in general banking business abroad with other Australian banks is being considered. It is expected that, although the agency is being shut, the appointment of a representativj here will not be overlooked.

A factor entirely ignored in the above cable is that the excursions of the Commonwealth Government into the American loan market last year were par' ticularly unfortunate. Australian public bonds were literally hawked around in American financial centres and it was generally understood that the experiment of seeking ontside 'loa/ns from any other centre than London wag not hkely to be repeated.