INTERNATIONAL BANKING.

Press, Volume XLIV, Issue 19389, 15 August 1928, Page 10

INTERNATIONAL BANKING.

(ytbittxn roB thb fbxsi.) By a Commercial Expert of the , "Economist," London. The London Money Market: Gold Imports. The London money market has witnessed an event of outstanding importance during the past few weeks. Imports of gold from America have been taking place on a very substantial scale, the greater part having been secured by the Bank of England. The exact circumstances and significance ot these imports are somewnat shrouded in mystery. In market circles, indeed, there is a good deal of speculation in this connexion. The imports do not represent an ordinary exchange transaction, as for some time the pound sterling has been valued at slightly over 4.88 dollars in New York and the gold import point is understood to be slightly over 4.90 dollars. According to a common report, the gold has been imported by one of the "big five" joint stock banks with a view to assisting—the word "forcing" has been used m some quarters—the Bank of England to reduce its minimum rate of discount. This particular bank, it is stated, believes that bank rate, now standing at 4J per. cent, should be reduced to 4 per cent, in order to assist trade and industry. Whatever credence may be attached to market gossip, there can .be no doubt, that, a "delicate monetary situation has arisen. Domestic conditions are favourable to a lower bank rate, for the existing bank • rate is • not "effective," market rates being Out of touch with it. But the international situation, is almost certainly not favourable to a lower bank rate. In these days of close central bank co-operation, for instance, it may upset a prearranged scheme of co-ordinated. rates. In particular, it is doubtful whether America, where a determined effort is being made to curb speculation, would welcome a reduction. And, taking the long view of the domestic situation, a lower bank rate. hardly seems advisable, for in the course of a few months the autumn strain on the sterlingdollar exchange will begin to make itself felt. It remains to be, seen, however, what the Bank of England deems to bo its duty, though its tradition of conservatism should be borne in mind.

Prance and the Gold Standard. . At the time of writing the most important problem which is exercising the minds .of international financiers is the future of the French franc. It had been expected that immediately the elections were over—and assuming, as they were, in favour of M. Poincare —an official announcement would have been; made regarding a de jure stabilisation scheme. M. Pomcare, however, has apparently considered it inexpedient to fulfil general expectations, for no announcement has so far been made. But in usually wellinformed quarters it is believed tbat announcement will be made in the very near future. M. : Poincare has been engaged in many conferences with .financial experts and these have impressed upon him the necessity for early action. In any case, the force of circumstances will force his hand, since it he does not act there will be an almost universal campaign of speculation on the rise of the franc to higher levels; and this might easily be most dangerous to M. Poincare's plans. The question; of the hour is, of course, the exact rate at which, the franc will be linked with gold. It js regarded 'as almost certain that it will be very closely in the neighbourhood of the figure at which it has remained for the past 22 months —namely, rather more than 124 francs to the pound sterling. , The fact that the Bank of France recently raised its buying price for sterling from. 124.02 to 124J0 certainly suggests that it will not be lower. In:the main, the conditions, laid down by the committee of experts as to the carrying ,out of de jure stabilisation have been .fulfilled. London Discount Companies.

-During the past'."week, or two one of the.leading discount companies of Lori-don-Tr-namely, the Union Discount Company—*has announced that it is increasing its capital. It would seem, therefore, that this company foresees . the opportunity for employing the additional capital profitably. The outlook for the London discpunt companies has certainly improved somewhat in recent years. The volume of sterling bills—.which are of course the discount companies' raw material—haß undergone an increase. Before the war, it is estimated, there were some £ 350,000,000 sterling bills on the London discount market. Shortly after ; the war this figure, despite the increase,in prices in the meanwhile, has shrunk considerably, the figure being'.- put at no more than £2OO millions. Since this estimate was 3iade, however, much water has passed hder London Bridge. Britain has reestablished the gold standard, and in doing so has done much to restore the international .prestige of the pre-war pound sterling. It would not be true to say that anything spectacular has" happened, but the'r.e can be no doubt that in recent years, London has been, steadily consolidating her position as a leader in world finance. This has been reflected in an increase in the volume of sterling bills. "Moreover, it is possible Jtoat the use of the bill of exchange will be stimulated by an important provision of the new Currency Notes Bill—namely, that approved bills of exchange may be used as cover for bank notes. Of course, it is not overlooked that since the war the London discount market has to meet with increased competition from other international financial centres'. London, however, has an instinct for successfully conducting' discount business—the harvest of a long experience—which almost amounts to genius,: and this is standing London in good stead in her friendly rivalry wth new centres.

AUSTRALIA HOTEL. Australia Hotel, Ltd. (Sydney), reports a profit of £40,666, an increase o( £3128, but before declaring the profit a sum of £OOOO wsb apparently carried to reserve, the account being increased by that amount, whereas the previous year the apparent amount carried to reserve was £15,000. Dividends, are .unchanged, ordinary at 10 per cent., and preference at 6 per. cent.. Year ended June 30th, 1927. 1928. £ £ Net profit .. .. 88,538 40,666 Div., ord, 10 p.e. .. 38,916 88,916 Div., pref., 6 p.e. .. 1,980 1,980 Carried forward .. 1,953 1,716 Liabilities— Capital: Ordinary .. 387,884 889,169 Preference ...... 33,000 83,000 Reserve .. ..115,000 124,000 Machinery, renewal 14,650 16,650 Creditors .. " 47,859 44,381 Assets—. Freehold .. .. 485,000 485,000 Machinery .. 19,769 19,769 Furniture, etc. .. 47,755 47,755 Stock .; ..-■ 10,744 15,235 Debtorß ~. *31,125 *35,205 Cash .. .. 1,400 1,400 Goodwill ~ 25,000 25,000 ♦lncluding Commonwealth loans and investments. There is little change of note in the balitems. Creditors have decreased, and debtors have Increased, but in each case only to a moderate extent. The report states that during the year business: generally proved satisfactory, but taxation in various forms increased ' considerably, and it was necessary, to <make larger provision for that taxation and for increased wages. EGG AUCTION. Messrs Harris Bros., Ltd., report that the usual'weekly auction sale of "Feather Brand"- guaranteed fresh eggs was held yesterday afternoon. Supplies were large, but the demand was good, and all lots were cleared at the following prices :—Hen eßgs, first grade (2oz or over), Is 6d; hen eggs, second grade (under 20z),.1s sd. —6