TIGHT CONTROL

Auckland Star, Volume LXX, Issue 122, 26 May 1939, Page 10

TIGHT CONTROL

OVERSEAS FUNDS.

ACTION BY BANKS.

HEAVY LONDON DRAIN.

SERIOUS POSITION DEVELOPS. An increase in the drain' on New Zealand's London funds has resulted in a sudden tightening up of the control exercised by the Reserve Bank and the trading hanks on transfers of money overseas, and seveial instances in which funds have been refused or drastically restricted have occurred in Auckland. Applications for funds to branches of the banks are now required to be referred to head offices before a decision is made.

"For the past week or so there have iieen indications that a stricter surveillance was lieing exercised by the Reserve Bank on the remitting of funds overseas," said Mr. Hugh Thomson, president of the Auckland Importers' Association, to-day. in commenting on the position arising from the restrictions placed by the trading banks on such transfers.

"Serious State of Affairs." "The limits allowed the local banks have been reduced on at least two occasions during a short period until, at the present time, all applications must be referred to head offices of the trading

Uanks. which causes delays and an impediment to business." added .Mr. Thomson. "The action of one of the bank", reported by a member of my association, reveals a serious, state of affairs for the importing community.

"Last January an endeavour was made, at the Dominion conference of importers in Wellington, to obtain from (lie .Minister of Finance, the Hon. \V. N'ash, an assurance that finance would be provided for all licenses issued, but the .Minister's reply was non-committal. Importers, lulled into a sense of false security by the possession of licenses, and having purchased goods overseas, lind themselves, in a position where they may be deprived of the means of linaii>'iu» their transactions.

"It is difficult, witliout having a ■larifying statement from the Govern incut, to sum up'the real state of affairs, lint from return* available, it is known I hat t lir- London funds in the hands of (lie Kcserve Rank, on April 24, were £4.•>.">!).(>«> I. a figure approximately that at which the funds had stood for some mouths past."' "The w"iole situation is most disturbing for merchants, and therefore an authoritative statement as to the position of telegraphic, transfers, sight drafts, letters of credit and other means of financing overseas transactions should he made by the Government without delay."