DOMINION LOANS.

Press, Volume LXI, Issue 18552, 30 November 1925, Page 10

DOMINION LOANS.

A TEMPORARY EMBARGO. CHECKING BRAIN ON BRITAIN'S RESOURCES. (FEOM OUK OWN CORRESPONDENT.) LONDON. October 20. Although no official information is available regarding the Government's intention to plaoe an embargo on • Dominion borrowing in London, it is understood in -well-informed circles that, if imposed, it will only be a temporary measure to protect the seasonal financial operations in London on behalf of British trade and possibly the conversion or redemption of loans on behalf of the Imperial Government. It is j pointed out that a full explanation of j the reported restrictive measures to bo ■ applied to the Dominions would involve | the' disclosure of British Treasury j plans, which would be inexpedient from , its own point of view if any considerable British loan operations are imminent. "Americans, when they lend money to other nations, have a knack of insisting that trade shall follow the loan," says the "Financial Times," ''and when British colonial borrowers started flirtations with New York bankers in the matter of borrowing money, natural regret was expressed at the diversion of business from British industry that might be expected as a sequel. With British trade in need of all the assistance it can get, for the Treasury to frown upon colonial borrowing in London appears to be a short-sighted policy. The sharpest critic of the Treasury will admit that the Government's financial policy has been conceived, since the Armistice, upon broad and statesmanlike lines that have conduced, to the credit of the British nation and to the honour with which it Li held in colonial and foreign lands. Perplexity awaits illumination upon the obscurity that surrounds tho reported embargo upon colonial borrowing from tho Mother Country." Treasury Plans. On July 20th, in the House of Commons, a question was addressed to the Government regarding the ."discouragement shown towards the raising of loans in London for overseas purposes," and was replied to briefly by the Financial Secretary to the Treasury. Mr Guinness made the point that it was not in the interest of .any part of our trade that we should lend abroad more than our savings permit, and that if we continue to 1 over-lend a general increase in money rates would be inevitable. He was then asked whether tho Treasury imposed any restrictions, and hi sreply was in the negative. Further attempts were made to elicit information, but the Financial Secretary declined firmly to go more fully at question time into what he described as "this extremely complicated and contentious matter." West Australian Loan.

The Agents-General for Australia have waited on the R,t. Hon. L. S. Aroery, M.P., Secretary of State for the Colonies, to inform, him of their views in regard to the embargo placed on Dominion Joans, so that he might transmit a protest to the .Government. After listening. sympathetically to the grounds on which the protest is based, Mr Amery, it is understood, promised that the matter should' be gone intr> furthei, and a reply sent to the deputation at the earliest possible data. The point of the embargo in regard to the Dominions has been raise? by. the stopping of the proposed loan for a sum of about two millions which West Australia was prepared to float in London last week. The order in which Dominion loans are brought before the public Is settled by the Loan Council in Australia, in which all'the States except NJew South Wales are included. The Council met in August and settled the order in which the resScctive States should come on the Lonon market. When West Australia, in accordance with this arrangement! took steps for floating her loan last week, she was informed that the Bank of England, and the Treasury did not wish it to hj« proceeded with at pr«* sent. No publicly subscrißed loan can be raised in London without the permission of thfi Treasury; but this sanction, it was understood by the Dominions) was necessary only in the case of foreign loans, and the embargo that has been laid on the. latter'was not expected to apply to any parts of the British Empire. ' Decline of Trade Balances. . Even in England (writes the Diplomatic Correspondent of the "Daily

Telegraph") a good deal of misconeeption°prevails with, regard to the exact position which, shortly, is this. Thereis and can be, not official embargo upon the raising of loans by Dominion or foreign Governments, for the Treasury has no control over the banks and other issuing houses. But the Chancellor of the Exchequer and hi.s officials aro naturally in close and constant consultation With the Governor of tho Bank of England, and tho heads of other leading bants and financial houses in tho City'. During the past few years there hare been very heavy borrowings from abroad, and overseas, including tho Dawes and various international reconstruction loans. Lately, in view of tho decline of our trade balances, and the conditions of str'n-. gency 'created by the return to the gold standard, it has been agreed between the Treasury and the chief bankers that the drain on the country's financial resources by constant foreign issues in London should he checked. It has, in fact, been ascertained that Great Britain. is now lending more money than she is saving, a circumstance deemed unhealthy and dangerous by orthodox finance. The banks, consequently, took their own lino and concerted measures to stop the efflux of British money to Europe and overseas, by declining to' issue any more foreign and Dominion loans. Thus, when Australia expressed a desire to issue a loan here, she was advised to raise it in tho I American market, which is suffering

; tiun loan contemplated bj-jlf|^^9 i "Western Australia v bict^||^^^H j sion purposes would 'taHHN^^^H niouwealth in July stapHofl^^H