THE EXCHANGE LEVEL.

Auckland Star, Volume LXVI, Issue 243, 14 October 1935, Page 6

THE EXCHANGE LEVEL.

DOMINION FUNDS IN LONDON. (To tha Editor.} Your editorial of tie Sth iosi. - - zja exchange deals with a most snipastsaof the exchange policy of tie Xatfexal Gerat®ment. but yon unfortunately orerl-x-ksd a. £aj» ■» hieh completely reverses tie Sail Your statement of the position shows tist »♦ August 1, 1954. "tie total foods of tie E.«erre B.*nk and trading banks Is. v. Lz-~ toia33ei £31,000,000. and that on August 1. IS®.", tw had increased to £37X00.08). Yon •: '• frkccsti the fact that the trading banks it; e reas&wi for investment to London just on i so that- if these latter figures a:-; take® isi» consideration the result of the year's operations shows that the oversea ftassk sssseat of increasing. as predicted by tie ozz<>ittzii of the Government, have aetnallv sfiseretvi by over four million pounds, which is ex&oSr the opposite to the predietfon. Tat figsres show that imtead of being "tir» a tree" there is not even a tree to get up. I: : j~ now clearly demonstrated that tie raais is London are not worrying the trad • - .Azbs very orach, as if 'so they would not 'l-« more there for investment- W_ GfiAY. [We are well aware of the transfer of 's&z't funds from New Zealand so L-jsioe *i3ti oeearred last year, bat we mast point am. to Mr. Gray that it was due to special dtaetmstaneee and does not justify his assaEsptsaa that the funds in London "are not worayiag the trading banks very much." It is »«f. known that when tlse Beserve Bask bsjas. basin-ess all the trading bjsnfcs fotrad tibesseelvee suddenly deprived of tie oppostsontT to invest their funds in Treasury Mils, as the demand for bank accost soda tic® gss»rally was at an extremely low ebb. tie csily course, short of keeping the funds idle is tie Dominion, was to transfer them eSeew&Kß. mainly to London. It so isappeaed that is. the same year as these transfer? were sade the Dominion's trade was weakened by few prices on the British market, and the £•-_,* into the banks at the London end was esasiderably below what it had been tie rt.h-. before. At the same time, imports isereasei These facts were mentioned in our leader. Tae net resuit of the year's operation ~ass --j show an apparent steadiness in tie zssvsssi of exchange assets. This steadiness, as we pointed out, was the by-product of abaorssal influences. The year, in fact, was an atoarinal one. To-day the ex-port position is greatly improved. This, of course, must be reSeetzd in a larger 'flow of funds into the" basks, ia London. Whether or not the total a:?~: of the funds will be swelled to any eonsideraMe extent as a result cannot be foreseen at t&ss stage. It will depend upon the rate of lareeasß in the Dominion's import trade and upas the opportunities offering for the profitable investment of bank funds in New Zealand.—E>i.J